23LCertain benefits in the nature of income not assessable

23L  Certain benefits in the nature of income not assessable  (1) Income derived by a taxpayer by way of the provision of a fringe benefit is not assessable income and is not exempt income of the taxpayer.  (1A) Income derived by a taxpayer by way of the provision of a benefit (other than a benefit to which section 15‑70 of the Income Tax Assessment Act 1997 applies) that, but for paragraph (g) of the definition of fringe benefit in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986, would be a fringe benefit is exempt income of the taxpayer.  (a) in a year of income, a taxpayer derives income consisting of one or more non‑cash business benefits (within the meaning of section 21A); and  (b) the total amount that is applicable under section 21A in respect of those benefits does not exceed $300; the income is exempt income. Division 1AB—Certain State/Territory bodies exempt from income tax Subdivision A—Exemption for certain State/Territory bodies 24AK  Key principle A body that is a State/Territory body (an STB) is exempt from income tax under this Division unless it is an excluded STB. There are 5 different ways in which a body can be an STB. 24AL  Diagram—guide to work out if body is exempt under this Division   The following diagram is a guide to help work out whether a body is exempt from income tax under this Division:    24AM  Certain STBs exempt from tax   The income of a State/Territory body (an STB) is exempt from income tax unless section 24AN applies to the STB. 24AN  Certain STBs not exempt from tax under this Division   Income derived by an STB is not exempt from income tax under this Division if, at the time that it is derived, the STB is an excluded STB. Notes: 1. For the definition of excluded STB see section 24AT. 2. Even though an excluded STB is not exempt from income tax under this Division, it may still be exempt under another provision of this Act. 24AO  First way in which a body can be an STB  (a) it is a company limited solely by shares; and  (b) all the shares in it are beneficially owned by one or more government entities. Note: For the definition of government entity see section 24AT. Note that an excluded STB is not a government entity. 24AP  Second way in which a body can be an STB  (c) the legislation provides that it must distribute all of its profits (if any) only to one or more government entities; and  (d) if the legislation makes provision as to the way its net assets may be distributed if it is dissolved or wound up—the provision is that, if it is dissolved, all of its net assets (if any) must be distributed only to one or more government entities. 24AQ  Third way in which a body can be an STB  (c) the legislation gives the power to appoint or dismiss its governing person or body only to one or more government entities. 24AR  Fourth way in which a body can be an STB  (c) the legislation gives the power to direct its governing person or body as to the conduct of its affairs only to one or more government entities. 24AS  Fifth way in which a body can be an STB  (a) it is not a company limited solely by shares; and  (b) it is not established by State or Territory legislation; and  (c) all the legal and beneficial interests (including, but not limited to, interests as to income, profits, dividends, capital and distributions of capital) in it are held only by one or more government entities; and  (d) all the rights or powers (if any) to vote, appoint or dismiss its governing person or body and direct its governing person or body as to the conduct of its affairs are held only by one or more government entities. 24AT  What do excluded STB, government entity and Territory mean?   In this Division: excluded STB means an STB that:  (a) at a particular time, is prescribed as an excluded STB in relation to that time; or  (b) is a municipal corporation or other local governing body (within the meaning of section 50‑25 of the Income Tax Assessment Act 1997); or  (c) is a public educational institution to which any of paragraphs 50‑55(1)(a) to (c) of the Income Tax Assessment Act 1997 applies; or  (d) is a public hospital to which any of paragraphs 50‑55(1)(a) to (c) of the Income Tax Assessment Act 1997 applies; or  (e) is a superannuation fund. government entity means:  (a) a State; or  (b) a Territory; or  (ba) a municipal corporation or other local governing body (within the meaning of section 50‑25 of the Income Tax Assessment Act 1997); or Note: The effect of this paragraph is that some bodies owned or controlled by a municipal corporation or other local governing body may be an STB even though the municipal corporation or other local governing body is an excluded STB.  (c) another STB that is not an excluded STB. Territory means the Northern Territory or the Australian Capital Territory. 24AU  Governor, Minister and Department Head taken to be a government entity   For the purposes of sections 24AQ, 24AR and 24AS, if the power to appoint, dismiss or direct the governing body is given to, or is held by:  (a) a Governor of a State; or  (b) a Minister of the Crown of a State; or  (c) a Minister of a Territory; or  (d) the head of a Department of a State or a Territory; or  (e) any combination of paragraphs (a) to (d); the power is taken to be given to, or held by, a government entity. 24AV  Regulations prescribing excluded STBs States and Territories to consent to STBs being excluded STBs  (1) The regulations may prescribe that an STB is an excluded STB only if all States and Territories consent to the STB being so prescribed. Retrospective application of regulations prescribing excluded STBs  (2) Subsection 12(2) (retrospective application of legislative instruments) of the Legislation Act 2003 does not apply to a regulation prescribing an STB as an excluded STB. Subdivision B—Body ceasing to be an STB 24AW  Body ceasing to be an STB   If a body ceases to be an STB in a year of income (the cessation year), this Act applies to the body as if:  (a) the cessation were a change which requires a company to calculate its taxable income and tax loss under Subdivision 165‑B of the Income Tax Assessment Act 1997; and  (b) the references in that Subdivision to “company” were references to “body”; and  (c) if the body is not a company—there were no further requirement for the body to calculate its taxable income for the year of income under that Subdivision; and  (d) the amount of any notional loss of the body calculated under section 165‑50 of that Act for the period before the cessation were nil; and  (e) the body’s deductions for tax losses were attributed under section 165‑55 of that Act to the period before the cessation and not to any other period; and  (f) those deductions were taken not to be full year deductions under section 165‑55 of that Act; and  (g) the application of Parts 3‑1 and 3‑3 of the Income Tax Assessment Act 1997 were modified, for the purposes of that Subdivision, in accordance with section 24AX of this Act. 24AX  Special provisions relating to capital gains and losses Period after cessation date—prior net capital losses to be disregarded  (1) In determining if an amount is to be included in the assessable income of the body under Parts 3‑1 and 3‑3 of the Income Tax Assessment Act 1997 for a period that occurred after the cessation, any net capital losses incurred before the cessation are to be disregarded. Special cases where net capital gain before cessation and net capital loss after cessation  (2) Subsections (3) and (4) apply if:  (a) a net capital gain accrued in the period before the cessation; and  (b) if the period from the cessation until the end of the year of income were treated as a year of income—a net capital loss would have accrued in that period. Special case 1—gain exceeds loss  (3) If this subsection applies and the net capital gain exceeds the net capital loss:  (a) the amount that is to be included in the assessable income of the body for the period that occurred before the cessation as a result of the net capital gain accruing to the body is taken to be the amount by which the net capital gain exceeds the net capital loss; and  (b) no net capital gain is taken to have accrued, and no net capital loss is taken to have been incurred, in any period in the cessation year after the cessation; and  (c) in determining if a net capital gain accrued to, or a net capital loss was incurred by, the body for the year following the cessation year, no net capital loss is taken to have been incurred by the body in the cessation year. Special case 2—loss equal to or exceeds gain  (4) If this subsection applies and the net capital gain does not exceed the net capital loss:  (a) no amount is to be included in the assessable income of the body for any period in the cessation year as a result of a net capital gain accruing to the body; and  (b) in determining if a net capital gain accrued to, or a net capital loss was incurred by, the body for the year following the cessation year, the net capital loss that the body incurred in the cessation year is taken to be the amount (if any) by which the net capital loss exceeds the net capital gain. 24AY  Losses from STB years not carried forward  (1) If a body is an STB on the last day of a year of income in which it incurs a tax loss, the tax loss is not allowable as a deduction from the body’s assessable income of a later year of income unless the body is an STB on the first day of that later year of income. Note: This section prevents losses from years prior to the cessation year from being carried forward to years after the cessation year.  (2) This section only applies to a tax loss incurred in the 1995‑96 year of income or a later year of income. 24AYA  Effect of unfunded superannuation liabilities  (1) This section applies to a deduction under section 290‑60 of the Income Tax Assessment Act 1997 in respect of a contribution made in relation to a person who was an employee of a prescribed excluded STB when it ceased to be an STB.  (2) A deduction to which this section applies is not allowable to the body for any year of income unless the requirements of subsections (3) and (4) are complied with.  (3) For the deduction to be allowable, the body must obtain a certificate by an authorised actuary stating the actuarial value, as at the time the body ceases to be an STB, of liabilities of the STB to provide superannuation benefits for, or for SIS dependants of, employees of the body, where the liabilities:  (a) accrued after 30 June 1995 and before the time when the body ceased to be an STB; and  (b) were, according to actuarial principles, unfunded at that time.  (4) The certificate must be in a form approved in writing by the Commissioner. The body must obtain the certificate:  (a) before the date of lodgment of its return of income of the year of income in which the body ceased to be an STB; or  (b) within such further time as the Commissioner allows.  (5) If the body obtains the certificate, a deduction to which this section applies is nevertheless not allowable for a year of income if the sum of all deductions to which this section applies for the year of income is less than or equal to the unfunded liability limit (see subsection (6)) for the year of income.  (6) If the sum is greater than that limit, so much of the deduction as is worked out using the following formula is not allowable:    Unfunded liability limit for a year of income is:  (a) if the year of income is the one in which the body ceases to be an STB—the actuarial value of the liabilities set out in the actuary’s certificate; or  (b) in any other case—that actuarial value as reduced by the total amount of deductions to which this section applies that, because of subsection (5), have not been allowable to the body for all previous years of income.  (7) Expressions used in this section that are also used in section 290‑60 of the Income Tax Assessment Act 1997 have the same respective meanings as in that section. 24AZ  Meaning of period and prescribed excluded STB   In this Subdivision: period means any of the periods into which the cessation year is divided under section 165‑45 of the Income Tax Assessment Act 1997. prescribed excluded STB means an STB that is an excluded STB as a result of regulations made for the purposes of paragraph (a) of the definition of excluded STB in section 24AT. Division 2—Income Subdivision A—Assessable income generally 25A  Assessable income to include certain profits  (1A) This section does not apply in respect of the sale of property acquired on or after 20 September 1985.  (1B) This section does not apply to a profit arising in the 1997‑98 year of income or a later year of income from the carrying on or carrying out of a profit‑making undertaking or scheme, even if the undertaking or scheme was entered into, or began to be carried on or carried out, before the 1997‑98 year of income. Note: Section 15‑15 (Profit‑making undertaking or plan) of the Income Tax Assessment Act 1997 deals with such a profit.  (1) The assessable income of a taxpayer shall include 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.  (2) Subject to subsection (3), where:  (a) after 23 August 1983, a taxpayer sold or sells property (in this subsection referred to as the relevant property) being:  (i) shares in a private company;  (ii) an interest in a partnership; or  (iii) an interest in a private trust estate; and  (b) at the time of sale of the relevant property:  (i) the company, partnership or trustee of the trust estate, as the case may be, held property that:  (A) was acquired for the purpose of profit‑making by sale by the company, partnership or trustee, as the case may be; and  (B) was not excepted property of the company, partnership or trust estate, as the case may be; or  (ii) the company, partnership or trustee of the trust estate, as the case may be, held an interest, through one or more interposed companies, partnerships or trusts, in property that:  (A) was acquired for the purpose of profit‑making by sale by another private company, partnership or trustee of a private trust estate; and  (B) was not excepted property of that other company, partnership or trust estate, as the case may be; the taxpayer shall, for the purposes of the application of this Act (including any application of any other provision of this section), be deemed to have acquired the relevant property for the purpose of profit‑making by sale.  (3) Subsection (2) does not apply in relation to the sale by a taxpayer of property where the Commissioner, having regard to:  (a) the extent to which the assets of the company, partnership or trust estate, as the case may be, referred to in paragraph (2)(a), immediately before the time of sale, consisted of the property referred to in subparagraph (2)(b)(i) or the interest referred to in subparagraph (2)(b)(ii), as the case may be;  (b) the nature and extent, immediately before the time of sale, of the taxpayer’s control of the company, partnership or trust estate, as the case may be, referred to in paragraph (2)(a) including, in the case of a company, the nature and extent of the taxpayer’s shareholding in the company;  (c) the circumstances surrounding any other sale, whether or not by the taxpayer, of shares in the company, or an interest in the partnership or trust estate, as the case may be, referred to in paragraph (2)(a), being a sale at a time when the property of that company, partnership or trust estate included the property referred to in subparagraph (2)(b)(i) or the interest referred to in subparagraph (2)(b)(ii), as the case may be; and  (d) such other matters as the Commissioner considers relevant; considers that it is not appropriate that that subsection should apply in relation to the sale of the property by the taxpayer.  (a) a taxpayer acquired or acquires property, being shares in a company, for the purpose of profit‑making by sale; and  (b) after 23 August 1983:  (i) the company issued or issues other shares (in this subsection referred to as the bonus shares) to the taxpayer in satisfaction of a dividend (including an amount debited against an amount standing to the credit of a share premium account) payable to the taxpayer in respect of the shares referred to in paragraph (a); or  (ii) by reason that the taxpayer was the owner of the shares referred to in paragraph (a), the company issued or issues to the taxpayer rights to acquire other shares in the company; the taxpayer shall, for the purposes of the application of this Act (including any other application of this subsection and any application of any other provision of this section), be deemed to have acquired the bonus shares or the rights, as the case may be, for the purpose of profit‑making by sale.  (5) Where, after 23 August 1983, property was or is acquired by a taxpayer as a result of a transfer in the prescribed manner by a person who acquired the property for the purpose of profit‑making by sale, the taxpayer shall, for the purposes of the application of this Act (including any other application of this subsection and any application of any other provision of this section), be deemed to have acquired the property for the purpose of profit‑making by sale.  (a) after 23 August 1983, a taxpayer sold or sells property; and  (b) the property sold was:  (i) an interest in property, being property acquired by the taxpayer for the purpose of profit‑making by sale; or  (ii) property, or an interest in property, in which was merged an interest in property, being an interest acquired by the taxpayer for the purpose of profit‑making by sale; the taxpayer shall, for the purposes of the application of this Act (including any application of any other provision of this section), be deemed to have acquired the property sold for the purpose of profit‑making by sale.  (7) For the purposes of subsection (2), where a company, partnership or trustee of a trust estate holds or held property (in this subsection referred to as the underlying property) consisting of:  (a) an interest in property, being property acquired by the company, partnership or trustee for the purpose of profit‑making by sale; or  (b) property, or an interest in property, in which was merged an interest in property, being an interest acquired by the company, partnership or trustee for the purpose of profit‑making by sale; the company, partnership or trustee, as the case may be, shall be deemed to have acquired the underlying property for the purpose of profit‑making by sale.  (a) property (in this subsection referred to as the acquired property) was or is acquired for the purpose of profit‑making by sale; and  (b) after 23 August 1983, property (in this subsection referred to as the transferred property) being:  (i) an interest in the acquired property; or  (ii) property, or an interest in property, in which was merged an interest in the acquired property;   was or is transferred to a taxpayer in the prescribed manner; the taxpayer shall, for the purposes of the application of this Act (including any other application of this subsection and any application of any other provision of this section), be deemed to have acquired the transferred property for the purpose of profit‑making by sale.  (9) Where a taxpayer sold or sells property that, by virtue of any of the preceding provisions of this section, is deemed to have been acquired by the taxpayer for the purpose of profit‑making by sale, so much (if any) of the proceeds of sale as, in the opinion of the Commissioner, is appropriate shall, for the purposes of this Act, be deemed to be profit arising from the sale by the taxpayer of the property.  (10) For the purposes of the application of subsection (9) in relation to the sale of property (in this subsection referred to as the relevant property) by a taxpayer:  (a) if:  (i) the relevant property is deemed by subsection (2) to have been acquired by the taxpayer for the purpose of profit‑making by sale;  (ii) the property (in this paragraph referred to as the underlying property) to which sub‑subparagraph (2)(b)(i)(A) or (2)(b)(ii)(A), as the case may be, applies was actually acquired for the purpose of profit‑making by sale by the company, partnership or trustee referred to in that sub‑subparagraph (which company, partnership or trustee is in this paragraph referred to as the underlying owner); and  (iii) the relevant property was not transferred to the taxpayer in the prescribed manner;   the Commissioner shall have regard to the extent to which, in the Commissioner’s opinion, the proceeds of sale of the relevant property are attributable to the amount of any increase in the value of the underlying property during the period (in this paragraph referred to as the relevant period) when the underlying property was held by the underlying owner and the relevant property was held by the taxpayer reduced by the amount of any capital expenditure incurred by the underlying owner in respect of the underlying property during the relevant period (not including expenditure in respect of which a deduction has been allowed, or is allowable, to the underlying owner);  (b) if the relevant property is deemed by subsection (5) to have been acquired by the taxpayer for the purpose of profit‑making by sale and the relevant property was actually acquired for the purpose of profit‑making by sale by the person (in this paragraph referred to as the transferor) who transferred the relevant property to the taxpayer in the prescribed manner—the Commissioner shall have regard to the extent to which the amount (if any) that would have been included in the assessable income of the transferor if the transferor had sold the relevant property at the time when it was sold by the taxpayer for an amount of consideration equal to the amount of the consideration received or receivable by the taxpayer in respect of the sale of the relevant property by the taxpayer exceeds the sum of:  (i) any expenditure incurred by the taxpayer in respect of the relevant property, not including:  (A) any consideration given by the taxpayer in respect of the transfer of the relevant property to the taxpayer; or  (B) expenditure to which subparagraph (ii) applies;  (ii) where the taxpayer incurred expenditure of a capital nature in respect of the relevant property otherwise than:  (A) in acquiring property for the purpose of profit‑making by sale; or  (B) as part of a profit‑making undertaking or scheme;   an amount equal to so much of the consideration received or receivable by the taxpayer in respect of the sale of the relevant property by the taxpayer as exceeds the amount that, in the opinion of the Commissioner, would have been the consideration received or receivable by the taxpayer if the taxpayer had not incurred that capital expenditure; and  (iii) the amount of any profit included in the assessable income of the transferor in respect of the transfer of the relevant property to the taxpayer;  (c) if the relevant property is deemed to have been acquired by the taxpayer by virtue of the application of this section (either directly or indirectly) in relation to property (in this paragraph referred to as the related property) that was actually acquired by the taxpayer or by another person or other persons for the purpose of profit‑making by sale—the Commissioner shall have regard to the extent to which the relevant property consists of, or is attributable to, the related property;  (d) if the relevant property consists of rights to acquire shares in a company, being rights that the taxpayer is deemed by subsection (4) to have acquired for the purpose of profit‑making by sale—the relevant property shall be deemed to have been acquired by the taxpayer at no cost; and  (e) if the relevant property consists of bonus shares that the taxpayer is deemed by subsection (4) to have acquired for the purpose of profit‑making by sale—the cost to the taxpayer of the relevant property shall be ascertained in accordance with section 6BA.  (11) For the purposes of this section, property shall be taken to have been transferred to a person (in this subsection referred to as the transferee) in the prescribed manner if:  (a) the following conditions are satisfied:  (i) the property is transferred by way of gift or for consideration the amount or value of which is less than the amount that, in the opinion of the Commissioner, is the value of the property immediately before the time of transfer;  (ii) the property is transferred otherwise than as a result of:  (A) a will, a codicil or an order of a court that varied or modified the provisions of a will or a codicil; or  (B) an intestacy or an order of a court that varied or modified the application, in relation to the estate of a deceased person, of the provisions of the law relating to the distribution of the estates of persons who die intestate; and  (iii) the Commissioner is satisfied that the transferee and the person who transferred the property were not dealing with each other at arm’s length in relation to the transfer of the property; or  (b) the property:  (i) is transferred by way of a distribution of property of a private company or private trust estate made (whether in the course of the winding up of the company or trust estate or otherwise) to the transferee in the transferee’s capacity as a shareholder in the company or a beneficiary of the trust estate, as the case may be; and  (ii) is not excepted property of the company or trust estate, as the case may be.  (12) In this section:  (a) a reference to excepted property of a company, partnership or trust estate is a reference to:  (i) trading stock of the company, partnership or trustee; or  (ii) property being plant within the meaning of section 45‑40 of the Income Tax Assessment Act 1997 purchased for use by the company, partnership or trustee of the trust estate for the purpose of producing assessable income;  (b) a reference to a private company is a reference to a company other than a company the shares in which are listed for quotation in the official list of a stock exchange in Australia or elsewhere;  (c) a reference to a private trust estate is a reference to a trust estate other than a unit trust the units in which are listed for quotation in the official list of a stock exchange in Australia or elsewhere or are ordinarily available for subscription or purchase by the public; and  (d) a reference to property generally or to a particular kind of property includes a reference to an estate or interest in property or in that kind of property, as the case may be. 26AB  Assessable income—premium for lease  (1A) For the purposes of assessments for the 1997‑98 year of income and later years of income, this section applies only in relation to assignments of leases granted before 20 September 1985. Note: The Income Tax Assessment Act 1997 does not contain a rewritten version of this section.  For the 1998‑99 year of income and later years of income, Parts 3‑1 and 3‑3 (about CGT) deal with the income tax treatment of premiums for: - granting leases; and - assigning leases granted on or after 20 September 1985.  For the 1997‑98 year of income, former Part IIIA of this Act (about CGT) dealt with the income tax treatment of such premiums.  (1) In this section, premium means a consideration payable in one amount, or each amount of a consideration payable in more than one amount, where the consideration is:  (a) in the nature of a premium, fine or foregift payable for or in connexion with the grant or assignment of a lease; or  (b) for or in connexion with an assent to the grant or assignment of a lease; but does not include an amount in respect of goodwill or a licence.  (2) Where, in the year of income, a taxpayer receives a premium that relates to the grant or assignment of a lease of property that was not, at the date on which the agreement to grant or assign the lease was made, or the assent to the grant or assignment of the lease was given, as the case may be, intended by the grantee or assignee to be used by the grantee or the assignee or some other person wholly or partly for the purpose of gaining or producing assessable income, the assessable income of the taxpayer shall include the premium.  (3) Where, in the year of income, a taxpayer receives a premium that relates to the grant or assignment of a lease of property that was, at the date on which the agreement to grant or assign the lease was made, or the assent to the grant or assignment of the lease was given, as the case may be, intended by the grantee or assignee to be used by the grantee or assignee or some other person partly for the purpose of gaining or producing assessable income and partly for other purposes, the assessable income of the taxpayer shall include such part of the premium as the Commissioner considers may reasonably be attributed to the intended use of the property for purposes other than gaining or producing assessable income.  (4) Where, in a case referred to in subsection (2) or (3), the taxpayer satisfies the Commissioner that, at the date on which the agreement to grant or assign the lease was made, or the assent to the grant or assignment of the lease was given, as the case may be, the taxpayer believed on reasonable grounds that the grantee or assignee intended a particular use of the property by the grantee or assignee or some other person for the purpose of gaining or producing assessable income, the Commissioner may apply this section on the basis that that intention existed.  (5) This section does not apply in relation to:  (b) a premium received in connexion with the assignment of a lease of land granted under a law of a State or Territory relating to mining;  (c) a premium received in connexion with the grant or assignment of a lease that was, for the purposes of former section 88B, a grant or assignment for mining purposes; or  (d) a premium received in connexion with the assignment from the Commonwealth or a State of a lease:  (i) granted in perpetuity or for a term not less than 99 years; or  (ii) with a right of purchase; or  (iii) effecting improvements to be used for residential purposes only. 26AF  Assessable income to include value of benefits received from or in connection with former paragraph 23(ja) funds or former section 23FB funds  (a) in a year of income and after 19 August 1980, a taxpayer receives or obtains a benefit of any kind out of, or attributable to assets of, a paragraph 23(ja) fund or a section 23FB fund;  (aa) if the fund is an exempt fund within the meaning of section 26AFB (as in force just before the commencement of Schedule 1 to the Superannuation Legislation Amendment (Simplification) Act 2007)—the benefit was received or obtained by the taxpayer before the proclaimed superannuation standards day;  (b) the benefit is received or obtained otherwise than in accordance with approved terms and conditions applicable to the fund at the time when the benefit is received or obtained; and  (c) the Commissioner is satisfied that the taxpayer received or obtained the benefit:  (i) by reason that the taxpayer was, or had been, a member of the fund;  (ii) by reason that the taxpayer was, or had been, a dependant of a person who was, or had been, a member of the fund; or  (iii) by reason that the taxpayer was, or had been, associated with a person who was, or had been, a member of the fund; the assessable income of the taxpayer of the year of income shall include the amount or value of that benefit.  (2) Where, in a year of income and after 19 August 1980, a taxpayer receives valuable consideration in respect of the transfer by the taxpayer to another person (whether by assignment, by declaration of trust or by any other means) of a right (whether vested or contingent) to receive a benefit from a fund, being a paragraph 23(ja) fund or a section 23FB fund and not being an exempt fund within the meaning of section 26AFB (as in force just before the commencement of Schedule 1 to the Superannuation Legislation Amendment (Simplification) Act 2007), the assessable income of the taxpayer of the year of income shall include the amount or value of that consideration. approved terms and conditions, in relation to a fund, means:  (a) in the case of a paragraph 23(ja) fund—terms and conditions approved by the Commissioner under subparagraph 23(ja)(ii) as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 4) 1987; or  (b) in the case of a section 23FB fund—terms and conditions approved by the Commissioner under subsection 23FB(2) as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 4) 1987. paragraph 23(ja) fund means a fund the income of which of any year of income is or has been exempt from tax by virtue of paragraph 23(ja) as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 4) 1987 or would, but for the provisions of section 121C as in force at any time before the commencement of section 21 of the Taxation Laws Amendment Act 1985 and Division 9C, be, or have been, exempt from tax by virtue of that paragraph; section 23FB fund means:  (a) a fund the income of which of any year of income is or has been exempt from tax by virtue of section 23FB as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 4) 1987 or would, but for the provisions of Division 9C, be, or have been, exempt from tax by virtue of that section; and  (b) a fund that was a section 79 fund for the purposes of this section as in force at any time before the commencement of the Income Tax Assessment Amendment Act (No. 3) 1984.  (4) For the purposes of this section, where either of the following paragraphs applies in relation to an exempt fund within the meaning of section 26AFB of this Act (as in force just before the commencement of Schedule 1 to the Superannuation Legislation Amendment (Simplification) Act 2007) in relation to the year of income of the fund commencing on 1 July 1986 or a subsequent year of income:  (a) the year of income ended before the proclaimed superannuation standards day and the income of the fund of the year of income would, but for the amendments made by the  Taxation Laws Amendment Act (No. 4) 1987, have been exempt from tax under paragraph 23(ja) or section 23FB of this Act, as in force at any time before the commencement of section 1 of that Act;  (b) the proclaimed superannuation standards day occurred during the year of income and, if the year of income had ended on the proclaimed superannuation standards day, the income of the fund of the year of income would have been exempt from tax under paragraph 23(ja) or section 23FB of this Act, as in force at any time before the commencement of section 1 of that Act; paragraph 23(ja) or section 23FB of this Act, as in force immediately before the commencement of section 1 of that Act, shall be taken to have continued to apply in relation to the fund in relation to the year of income of the fund. 26AFA  Assessable income to include value of certain benefits received from or in connection with former section 23F funds  (a) in a year of income and on or after 7 December 1983, a taxpayer receives or obtains a benefit of any kind out of, or attributable to assets of, a section 23F fund;  (aa) if the fund is an exempt fund within the meaning of section 26AFB (as in force just before the commencement of Schedule 1 to the Superannuation Legislation Amendment (Simplification) Act 2007)—the benefit was received or obtained by the taxpayer before the proclaimed superannuation standards day;  (b) the benefit:  (i) is not a benefit that the taxpayer has a right to receive from the fund; or  (ii) is an excessive benefit; and  (c) the Commissioner is satisfied that the taxpayer received or obtained the benefit:  (i) by reason that the taxpayer was, or had been, a member of the fund;  (ii) by reason that the taxpayer was, or had been, a dependant of a person who was, or had been, a member of the fund;  (iii) by reason that the taxpayer was, or had been, associated with a person who was, or had been, a member of the fund; or  (iv) by reason that the taxpayer was, or had been, associated with a person who had made contributions to the fund, being contributions to which Subdivision AA of Division 3 applied; the assessable income of the taxpayer of the year of income shall include the amount or value of that benefit.  (a) subsection (1) would, but for this subsection, apply to the amount or value of an excessive benefit received or obtained by a taxpayer out of, or attributable to assets of, a section 23F fund; and  (b) the Commissioner, having regard to:  (i) the nature of the fund;  (ii) the circumstances by reason of which the benefit is an excessive benefit; and  (iii) such other matters relating to the receiving or obtaining of the benefit by the taxpayer as the Commissioner considers relevant;   is satisfied that it would be unreasonable for subsection (1) to apply to the whole or part of the benefit; that subsection does not apply to the benefit, or to that part of the benefit, as the case may be.  (3) Where, in a year of income and on or after 7 December 1983, a taxpayer receives valuable consideration in respect of the transfer by the taxpayer to another person (whether by assignment, by declaration of trust or by any other means) of a right (whether vested or contingent) to receive a benefit from a fund, being a section 23F fund and not being an exempt fund within the meaning of section 26AFB (as in force just before the commencement of Schedule 1 to the Superannuation Legislation Amendment (Simplification) Act 2007), the assessable income of the taxpayer of the year of income shall include the amount or value of that consideration.  (4) In this section: dependant, in relation to a taxpayer, includes the spouse and any child of the taxpayer. excessive benefit means a benefit of any kind that is excessive in amount or value having regard to the matters mentioned in subparagraphs 23F(2)(h)(i), (ii), (iii) and (iv) as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 4) 1987. section 23F fund means a fund to which section 23F (as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 4) 1987) applies, or has applied, in relation to any year of income.  (5) For the purposes of this section, where either of the following paragraphs applies in relation to an exempt fund within the meaning of section 26AFB of this Act (as in force just before the commencement of Schedule 1 to the Superannuation Legislation Amendment (Simplification) Act 2007) in relation to the year of income of the fund commencing on 1 July 1986 or a subsequent year of income:  (a) the year of income ended before the proclaimed superannuation standards day and section 23F of this Act, as in force immediately before the commencement of section 1 of the Taxation Laws Amendment Act (No. 4) 1987, would, but for the amendments made by that Act, have applied in relation to the fund in relation to the year of income;  (b) the proclaimed superannuation standards day occurred during the year of income and, if the year of income had ended on the proclaimed superannuation standards day, section 23F of this Act, as in force immediately before the commencement of section 1 of that Act, would, but for the amendments made by that Act, have applied in relation to the fund in relation to the year of income; section 23F of this Act, as in force immediately before the commencement of section 1 of that Act, shall be taken to have continued to apply in relation to the fund in relation to the year of income of the fund. 26AG  Certain film proceeds included in assessable income  (a) under a contract entered into on or after 1 October 1980, a taxpayer has expended, or is deemed by former section 124ZAP to have expended, capital moneys in producing, or by way of contribution to the cost of producing, a film;  (b) by reason of the moneys having been expended, the taxpayer became the owner of an interest in the copyright in the film; and  (c) a deduction has been allowed, or is allowable, to the taxpayer under former section 124ZAF or 124ZAFA in respect of some or all of those moneys; this section applies, and shall be deemed always to have applied, in relation to the taxpayer in relation to a year of income (whether commencing before or after the commencement of this section), to:  (d) any amount derived by the taxpayer in the year of income from sources in or out of Australia as consideration for the use of, or the right to use, the copyright or the film, to the extent to which the amount derived is attributable to the interest referred to in paragraph (b); and  (e) any amount (other than an amount to which paragraph (d) applies) receivable by the taxpayer from sources in or out of Australia as consideration in respect of the disposal, in the year of income, of the whole or a part of the interest referred to in paragraph (b).  (2) The assessable income of a taxpayer of a year of income shall include amounts to which this section applies in relation to the taxpayer in relation to the year of income.  (a) for any reason, including:  (i) the formation or dissolution of a partnership; or  (ii) a variation in the constitution of a partnership or in the interests of the partners;   a change has occurred in the ownership of, or in the interests of persons in, a copyright in a film;  (b) the person, or one or more of the persons, who owned the copyright before the change has or have an interest in the copyright after the change; and  (c) any person (in this subsection referred to as the relevant person) who had an interest in the copyright before the change:  (i) did not have an interest in the copyright after the change; or  (ii) had a lesser interest in the copyright after the change;  (d) if the relevant person did not have an interest in the copyright after the change, the relevant person shall be deemed, for the purposes of subsection (1), to have disposed of the whole of his or her interest in the copyright at the time when the change occurred for an amount of consideration equal to:  (i) if the change occurred in pursuance of an agreement and the agreement specified, as the value of the copyright for the purposes of the agreement, an amount greater than the value of the copyright at the time when the change occurred—so much of the amount specified in the agreement as bears to that amount the same proportion as the value, at the time when the change occurred, of the interest deemed to have been disposed of bears to the value of the copyright at the time when the change occurred; and  (ii) in any other case—the value, at the time when the change occurred, of the interest disposed of;  (e) if the relevant person had a lesser interest in the copyright after the change, the relevant person shall be deemed, for the purposes of subsection (1), to have disposed of a part of his or her interest in the copyright at the time when the change occurred for an amount of consideration equal to:  (i) if the change occurred in pursuance of an agreement and the agreement specified, as the value of the copyright for the purposes of the agreement, an amount greater than the value of the copyright at the time when the change occurred—so much of the amount specified in the agreement as bears to that amount the same proportion as the value, at the time when the change occurred, of the part of the interest deemed to have been disposed of bears to the value of the copyright at the time when the change occurred; and  (ii) in any other case—the value, at the time when the change occurred, of the part of the interest disposed of.  (4) For the purposes of this section, where, in pursuance of a judgment of a court or otherwise, an amount is paid to a taxpayer in respect of an infringement, or an alleged infringement, of a copyright in a film, the taxpayer shall be deemed to have disposed of a part of his or her interest in the copyright, at the time of payment, in consideration of the payment of that amount.  (5) Subject to subsections (3) and (6), a reference in this section to the consideration receivable by a taxpayer in respect of the disposal of the whole or a part of the taxpayer’s interest in a copyright (which whole or part is in this subsection referred to as the unit) is a reference to:  (a) where the unit is disposed of for a specified price—that price less:  (i) the expenses of the disposal; and  (ii) if the disposal is a taxable supply—an amount equal to the GST payable on the supply; or  (b) where the unit is disposed of together with other property and no separate price is allocated to the unit—such amount as the Commissioner determines.  (a) a taxpayer disposes of the whole or a part of the taxpayer’s interest in a copyright (which whole or part is in this subsection referred to as the unit) to another person;  (b) the Commissioner is satisfied, having regard to any connection between the taxpayer and that other person or to any other relevant circumstances, that the taxpayer and that other person were not dealing with each other at arm’s length in relation to the disposal; and  (c) there was no amount receivable by the taxpayer in respect of the disposal or the amount receivable by the taxpayer in respect of the disposal was less than the value of the unit at the time of the disposal; the amount of the consideration receivable by the taxpayer in respect of the disposal shall be taken, for the purposes of this section, to be the amount that was the value of the unit at the time of the disposal.  (8) If:  (a) a non‑resident taxpayer derives, from sources outside Australia, income in respect of a film; and  (b) but for this subsection, subsection (2) would include the amount in the taxpayer’s assessable income of a year of income; that subsection does not include in the taxpayer’s assessable income so much of the amount as:  (c) is attributable to the exhibition of the film in the country from sources in which the income was derived; and  (d) is not exempt from income tax in the country from sources in which the income was derived.  (a) an amount (in this subsection referred to as the relevant amount) is derived by a partnership in a year of income; and  (b) if the relevant amount were derived by a partner in the partnership, the relevant amount, or a part of the relevant amount, would, by virtue of paragraph (1)(d), be an amount to which this section applies in relation to that partner in relation to the year of income;  (c) the relevant amount shall not be taken into account, for the purposes of any provision of this Act, in calculating the net income of the partnership, or the partnership loss, of any year of income in accordance with section 90; and  (d) for the purposes of the application of this Act in relation to a taxpayer being a partner in the partnership, an amount equal to:  (i) so much of the relevant amount as the partners have agreed is derived for the benefit of the taxpayer; or  (ii) if the partners have not agreed as mentioned in subparagraph (i)—so much of the relevant amount as bears to the relevant amount the same proportion as the individual interest of the taxpayer in the net income of the partnership of the year of income in which the relevant amount was derived by the partnership bears to that net income or, as the case requires, the individual interest of the taxpayer in the partnership loss for that year of income bears to that partnership loss;   shall be taken to have been derived by the taxpayer.  (a) a partnership has disposed of the whole or a part of the copyright or of an interest in the copyright in a film;  (b) an amount (in this subsection referred to as the relevant amount) is receivable by the partnership as consideration in respect of that disposal; and  (c) if the relevant amount were receivable by a partner in the partnership, the relevant amount or a part of the relevant amount would, by virtue of paragraph (1)(e), be an amount to which this section applies in relation to that partner in relation to the year of income;  (d) the relevant amount shall not be taken into account, for the purposes of any provision of this Act, in calculating the net income of the partnership, or the partnership loss, of any year of income in accordance with section 90;  (e) for the purposes of the application of this Act in relation to a taxpayer being a partner in the partnership, an amount equal to:  (i) so much of the relevant amount as the partners have agreed is receivable for the benefit of the taxpayer; or  (ii) if the partners have not agreed as mentioned in subparagraph (i)—so much of the relevant amount as bears to the relevant amount the same proportion as the individual interest of the taxpayer in the net income of the partnership of the year of income in which the disposal mentioned in paragraph (a) occurred bears to that net income, or, as the case requires, the individual interest of the taxpayer in the partnership loss for that year of income bears to that partnership loss;   shall be taken to be receivable by the taxpayer;  (f) where the taxpayer had an interest in the copyright before the disposal and did not have an interest in the copyright after the disposal or had a lesser interest in the copyright after the disposal, the amount deemed to be receivable by the taxpayer shall be deemed to be receivable in respect of the disposal by the taxpayer of his or her interest in the copyright or of a part of his or her interest in the copyright, as the case may be;  (g) where the disposal is deemed to have occurred by virtue of subsection (4) or is a disposal to which paragraph (13)(a) applies, the amount deemed to be receivable by the taxpayer shall be deemed to be receivable, in respect of the disposal by the taxpayer of a part of his or her interest in the copyright.  (11) In determining for the purposes of subsection (10) whether a partnership has disposed of the whole or part of a copyright or of an interest in a copyright and in determining the amount of consideration receivable by the partnership in respect of the disposal, subsections (4), (5), (6) and (13) apply as if the partnership were a taxpayer.  (12) Where:  (a) a taxpayer has disposed of the whole or a part of the taxpayer’s interest in a copyright;  (b) by reason of that disposal, an amount would, but for former subsection 124T(3), be included in the assessable income of the taxpayer of a year of income under former section 124P or would be applied, under former section 124N or 124S, in reducing the residual value, for the purposes of former Division 10B, of a unit of industrial property owned by the taxpayer; and  (c) but for this subsection, this section would apply, in relation to a year of income, to the amount of the consideration receivable by the taxpayer in respect of the disposal; the amount to which this section applies by virtue of the disposal is the amount of the consideration referred to in paragraph (c) reduced by the amount that would be included in the assessable income of the taxpayer, or would be applied under former section 124N or 124S, as mentioned in paragraph (b).  (13) In this section:  (a) a reference to a disposal by a taxpayer of the whole or a part of the taxpayer’s interest in a copyright in a film includes a reference to the assignment by the taxpayer of a right to receive amounts as consideration for the use of, or the right to use, the copyright or the film;  (b) a reference to an amount derived by a taxpayer as consideration for the use of, or the right to use, a copyright in a film includes a reference to an amount derived as consideration for the granting of a licence in respect of copyright in the film that is to come into existence at a future time or upon the happening of a future event;  (c) a reference to the value of property at a particular time shall, if there is insufficient evidence of the value of the property at that time, be read as a reference to such amount as, in the opinion of the Commissioner, is fair and reasonable;  (d) a reference to the expenditure of capital moneys is a reference to the expenditure of moneys that is expenditure of a capital nature;  (e) a reference to a taxpayer becoming the owner of an interest in copyright includes a reference to the taxpayer becoming the owner of the copyright; and  (f) a reference to copyright, in relation to a film, is a reference to the copyright subsisting in the film by virtue of Part IV of the Copyright Act 1968 and includes a reference to copyright subsisting in, or in relation to, the film or in any work comprised in the film, under the law of a country other than Australia. 26AH  Bonuses and other amounts received in respect of certain short‑term life assurance policies  (1) In this section, unless the contrary intention appears: agreement means any agreement, arrangement or understanding, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings. assurance year, in relation to an eligible policy, means the period of 12 months commencing on, or on any anniversary of, the date of commencement of risk of the policy. date of commencement of risk, in relation to an eligible policy, means the date of commencement of the period in respect of which the first or only premium paid under the policy was paid or, if the first or only premium was not paid in respect of a period, the date on which that premium was paid. eligible period, in relation to an eligible policy, means the period of 10 years commencing on the date of commencement of risk of the policy. eligible policy means a life assurance policy in relation to which the date of commencement of risk is after 27 August 1982, other than a funeral policy (as defined in the Income Tax Assessment Act 1997) issued on or after 1 January 2003. eligible reckoning date, in relation to an eligible policy, means the date of commencement of an assurance year that, for the purposes of an application of subsection (13), is the premium increase year referred to in that subsection.  (2) Where a paid‑up life assurance policy is issued to a taxpayer in lieu of an eligible policy:  (a) the paid‑up policy shall, for the purposes of this section, be deemed to be a continuation of the eligible policy; and  (b) no amount shall be taken for the purposes of subsection (4) to have been re‑invested or otherwise dealt with on behalf of the taxpayer or as he or she directs in connection with the issue of the paid‑up policy to the taxpayer in lieu of the eligible policy.  (3) This section applies to any amount received after 27 August 1982 under an eligible policy.  (4) For the purposes of this section, but subject to subsection (5), a taxpayer shall be taken to have received an amount under or in relation to an eligible policy although the amount is not actually paid to the taxpayer but is re‑invested or otherwise dealt with on his or her behalf or as he or she directs.  (5) Subsection (4) does not apply in relation to an amount in relation to an eligible policy if the amount is re‑invested or otherwise dealt with on behalf of the taxpayer or as the taxpayer directs so as to increase the amount that might reasonably be expected to be received under the eligible policy on a surrender or maturity of the eligible policy.  (6) Where, during the eligible period in relation to an eligible policy, a taxpayer receives an amount (in this subsection referred to as the relevant amount) under the policy as or by way of a bonus, being an amount that, but for this section, would not be included in the assessable income of the taxpayer of any year of income, the assessable income of the taxpayer of the year of income in which the relevant amount is received shall include:  (a) if the relevant amount is received during the first 8 years of the eligible period—an amount equal to the relevant amount;  (b) if the relevant amount is received during the ninth year of the eligible period—an amount equal to two‑thirds of the relevant amount; or  (c) if the relevant amount is received during the tenth year of the eligible period—an amount equal to one‑third of the relevant amount.  (6A) If, during the year of income, an amount referred to in subsection (6) is received during the eligible period in relation to an eligible policy held by the trustee of a non‑complying superannuation fund:  (a) subsection (6) does not apply to the amount; and  (b) the amount is included in the assessable income of the fund of the year of income.  (7) Subsection (6) does not apply to any amount received by a taxpayer in a year of income under an eligible policy where:  (a) the amount is received in consequence of:  (i) the death of the person on whose life the policy was effected; or  (ii) an accident, illness or other disability suffered by the person on whose life the policy was effected; or  (aa) the eligible policy is an RSA; or  (b) the eligible policy is held by the trustee of:  (i) a complying superannuation fund; or  (ii) a complying approved deposit fund; or  (iii) a pooled superannuation trust; or  (ba) the eligible policy is issued by a life assurance company and the company’s liabilities under the policy are to be discharged out of:  (i) complying superannuation assets within the meaning of the Income Tax Assessment Act 1997; or  (ii) segregated exempt assets within the meaning of that Act; or  (c) except where the policy was effected, purchased or taken on assignment with a view to it being forfeited, surrendered or otherwise terminated, or to it maturing, within 10 years—the amount was received by the taxpayer by reason of the forfeiture, surrender or other termination of the whole or a part of the policy in circumstances arising out of serious financial difficulties of the taxpayer.  (a) subsection (6) would, but for this subsection, apply to an amount (in this subsection referred to as the relevant amount) received by a taxpayer by reason of the forfeiture, surrender or other termination of the whole or a part of an eligible policy; and  (b) the Commissioner, having regard to:  (i) the total amount of premiums paid under the eligible policy;  (ii) the total amounts received by the taxpayer or by any other person under the eligible policy and the total amounts of bonuses included in the amounts so received;  (iii) the amount of the surrender value of the eligible policy at the time when the forfeiture, surrender or other termination occurred; and  (iv) such other matters as the Commissioner considers relevant, is of the opinion that it would be unreasonable for subsection (6) to apply to the relevant amount or to a part of the relevant amount; subsection (6) does not apply to the relevant amount, or to that part of the relevant amount, as the case may be.  (a) otherwise than as or by way of a bonus, a taxpayer receives an amount (in this subsection referred to as the relevant amount) under an eligible policy; and  (b) the Commissioner is of the opinion that the relevant amount or a part of the relevant amount represents the whole or part of:  (i) a bonus that has accrued or has been declared in respect of the policy; or  (ii) a bonus that can reasonably be expected to accrue in respect of the policy; the relevant amount or the part of the relevant amount, as the case may be, shall, for the purposes of subsection (6), be deemed to have been received by the taxpayer under the policy as or by way of a bonus.  (a) subsection (9) applies by reason that the Commissioner has formed an opinion under paragraph (9)(b) that the whole or a part of an amount received by a taxpayer represents the whole or a part of a bonus; and  (b) the taxpayer subsequently receives an amount (in this subsection referred to as the actual bonus), being the whole or a part of the bonus, or of the part of the bonus, as the case may be, referred to in paragraph (a) of this subsection;  (c) the operation of subsection (9) is not affected by the receipt of the actual bonus; and  (d) no part of the actual bonus shall be included in the assessable income of the taxpayer.  (11) Where, in relation to an eligible policy, a taxpayer receives an amount from the assurer, or from another person at the request of, or under an agreement with, the assurer, by way of an advance or loan in respect of which interest is not payable or in respect of which interest is payable at a rate less than the rate of interest that could reasonably be expected to be payable in respect of a loan of the same amount made on similar terms and conditions by the assurer or the other person, as the case may be, to a person with whom the assurer or that other person was dealing at arm’s length, the amount shall, for the purposes of subsection (9), be deemed to be an amount to which paragraph (9)(a) applies.  (12) Where an eligible policy, or any right to receive any benefits that have accrued, or will or may reasonably be expected to accrue, under an eligible policy, is sold or assigned in whole or in part by a taxpayer during the eligible period in relation to the policy:  (a) the amount of any consideration received by the taxpayer in respect of that sale or assignment shall be deemed to be an amount to which paragraph (9)(a) applies; and  (b) subsections (9) and (10) apply in relation to that consideration as if “represents” were omitted from paragraphs (9)(b) and (10)(a) and “is attributable” to  were substituted.  (13) Where the amount of the premiums payable under an eligible policy in relation to an assurance year (in this subsection referred to as the premium increase year) exceeds by more than 25% the amount of the premiums payable under the policy in relation to the immediately preceding assurance year, the eligible period in relation to the policy shall, for the purposes of:  (a) the application of subsection (6) in relation to any amount received under the policy after the date of commencement of the premium increase year and before the first subsequent eligible reckoning date (if any) in relation to the eligible policy; and  (b) the application of subsection (12) in relation to any sale or assignment of the policy after the date of commencement of the premium increase year and before the first subsequent eligible reckoning date (if any) in relation to the eligible policy; be reckoned from the date of commencement of the premium increase year.  (14) This section has effect in relation to an eligible policy in relation to which the date of commencement of risk is on or before 7 December 1983 as if:  (a) “10 years” were omitted from the definition of eligible period in subsection (1) and “4 years” were substituted;  (b) “8 years”, “ninth year” and “tenth year” were omitted from subsection (6) and “2 years”, “third year” and “fourth year” respectively were substituted; and  (c) “10 years” were omitted from paragraph (7)(c) and “4 years” were substituted. 26AJ  Investment‑related lottery winnings to be included in assessable income  (i) a loan benefit is provided to a taxpayer, or to another person, in respect of a year of income (in this subsection called the current year of income); or  (ii) an amount (other than loan principal) is paid or credited to a taxpayer, or to another person, during a year of income (in this subsection also called the current year of income); or  (iii) other property or services are provided to a taxpayer, or to another person, during a year of income (in this subsection also called the current year of income); and  (b) the making of a loan, the payment or crediting of the amount, or the provision of the property or services, as the case may be, is by way of winnings from:  (i) betting (including pool betting); or  (ii) a lottery or other form of gambling; or  (iii) a game with prizes; and  (c) the chance to participate in the betting, lottery, gambling or game (in this subsection called the betting chance) was provided:  (i) wholly or partly in respect of an investment held by the taxpayer in or with a third person (who may be an associate of the taxpayer) (in this subsection called the investment body); or  (ii) wholly or partly in relation directly or indirectly to such an investment; and  (d) the betting, lottery, gambling or game was organised by, or on behalf of:  (i) the investment body (either acting alone or together with one or more other persons); or  (ii) an associate of the investment body (either acting alone or together with one or more other persons); and  (e) if the recipient of the loan benefit, amount or property or services, as the case may be, is a person other than the taxpayer—either:  (i) the other person is an associate of the taxpayer; or  (ii) the loan benefit, amount or property or services, as the case may be, is provided under an arrangement to which the taxpayer, or an associate of the taxpayer, is a party; and  (f) no part of the value of the betting chance is included in the assessable income of the taxpayer of any year of income; and  (g) the provision of the betting chance is neither:  (i) a fringe benefit; nor  (ii) a benefit that, apart from paragraph (g) of the definition of fringe benefit in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986, would be a fringe benefit; then:  (h) if subparagraph (a)(i) applies—the taxpayer’s assessable income of the current year of income includes the amount (if any) by which the benchmark amount of interest in relation to the loan in respect of the current year of income exceeds the amount of interest that has accrued on the loan in respect of the current year of income; or  (i) if subparagraph (a)(ii) applies—the taxpayer’s assessable income of the current year of income includes the amount paid or credited; or  (j) if subparagraph (a)(iii) applies—the taxpayer’s assessable income of the current year of income includes the arm’s length value of the property or services, reduced by the recipient’s contribution (if any).  (2) If:  (a) apart from this subsection, an amount (in this subsection called the gross assessable amount) is included in a taxpayer’s assessable income of a year of income under paragraph (1) (h) in respect of a loan benefit; and  (b) assuming that:  (i) the recipient of the loan benefit had, on the last day of the period (in this subsection called the loan period) during the year of income when the recipient was under an obligation to repay the whole or any part of the loan, incurred and paid unreimbursed interest (in this subsection called the gross interest), in respect of the loan, in respect of the loan period; and  (ii) the amount of the gross interest was equal to the benchmark amount of interest in relation to the loan in respect of the year of income;   a once‑only deduction (in this subsection called the gross deduction) would, or would apart from Subdivisions F and GA of Division 3 of this Part, and Divisions 28 and 900 of the Income Tax Assessment Act 1997, have been allowable to the recipient in respect of the gross interest; the gross assessable amount is reduced by:  (c) if no interest accrued on the loan in respect of the loan period—the amount of the gross deduction; or  (d) in any other case—the amount worked out using the formula:      Gross deduction means the amount of the gross deduction.   Reducing amount means the amount (if any) that would, or that would apart from Subdivisions F and GA of Division 3 of this Part, and Divisions 28 and 900 of the Income Tax Assessment Act 1997, have been allowable as a once‑only deduction to the recipient in respect of the interest that accrued on the loan in respect of the loan period if that interest had been incurred and paid by the recipient on the last day of the loan period.  (3) If:  (a) apart from this subsection, an amount (in this subsection called the gross assessable amount) is included in a taxpayer’s assessable income of a year of income under paragraph (1)(j) in respect of the provision of property or services; and  (b) assuming that:  (i) the recipient of the property or services had, at the time the property or services were provided, incurred and paid unreimbursed expenditure in respect of the provision of the property or services; and  (ii) the expenditure was equal to the amount of the arm’s length value of the property or services;   a once‑only deduction would, or would apart from Subdivisions F and GA of Division 3 of this Part, and Divisions 28 and 900 of the Income Tax Assessment Act 1997, have been allowable to the recipient in respect of a percentage (in this subsection called the deductible percentage) of the expenditure; the gross assessable amount is reduced by the deductible percentage.  (4) For the purposes of the application of this section to a taxpayer, if a person (in this subsection called the provider) makes a loan to another person (who may be the taxpayer) (in this subsection called the recipient):  (a) the making of the loan is taken to constitute a loan benefit provided by the provider to the recipient; and  (b) that loan benefit is taken to be provided in respect of each year of income of the taxpayer during the whole or part of which the recipient is under an obligation to repay the whole or any part of the loan.  (5) For the purposes of this section, if a person (in this subsection called the provider) makes a deferred interest loan (in this subsection called the principal loan) to another person (in this subsection called the recipient):  (a) the provider is taken, at the end of:  (i) the period of 6 months commencing on the day on which the principal loan was made; and  (ii) each subsequent period of 6 months;   (being in either case a period during the whole of which the recipient is under an obligation to repay the whole or any part of the principal loan) to have made a loan (in this subsection called the deemed loan) to the recipient; and  (b) the amount of the deemed loan is equal to the amount by which the interest (in this subsection called the accrued interest) that has accrued on the principal loan in respect of that period exceeds the amount (if any) paid in respect of the accrued interest before the end of that period; and  (c) if any part of the accrued interest becomes payable or is paid after the time when the deemed loan is taken to have been made, the deemed loan is to be reduced accordingly; and  (d) the deemed loan is taken to have been made at a nil rate of interest.  (6) For the purposes of this section, if no interest is payable in respect of a loan, a nil rate of interest is taken to be payable in respect of the loan.  (7) For the purposes of this section, a person is taken to be under an obligation to pay or repay an amount even though the amount is not due for payment or repayment.  (8) For the purposes of this section, if a person does anything that results in the creation of property in another person, the first‑mentioned person is taken to have provided that property to the other person at the time when the property comes into existence.  (9) For the purposes of this section, if:  (a) a particular mode of application of money by a taxpayer in relation to another person (in this subsection called the investment body) would not, apart from this subsection, be an investment; and  (b) a chance to participate in:  (i) betting (including pool betting); or  (ii) a lottery or other form of gambling; or  (iii) a game with prizes;   is provided to the taxpayer or a third person:  (iv) wholly or partly in respect of the mode of application of money by the taxpayer; or  (v) wholly or partly in relation directly or indirectly to the mode of application of money by the taxpayer; and  (c) if a cash payment had been provided by the investment body to the taxpayer instead of that chance, the payment would constitute, to any extent, a return on an investment held by the taxpayer in or with the investment body; the mode of application of money is taken to be an investment held by the taxpayer with the investment body.  (10) If a ballot is held to determine the order in which loans are to be made by a Starr‑Bowkett building society to its members, then the making of a loan in accordance with the ballot is not covered by paragraph (1)(b). arm’s length value, in relation to property or services, means:  (a) the amount that the recipient could reasonably have been expected to have been required to pay to obtain the property or services from the provider under a transaction where the parties to the transaction are dealing with each other at arm’s length in relation to the transaction; or  (b) if such an amount cannot be practically determined—such amount as represents a reasonable valuation of the property or services. arrangement 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 unilateral or otherwise. associate has the same meaning in relation to a person as that expression has in relation to a person in section 318. benchmark amount of interest, in relation to a loan, in relation to a year of income, means the amount of interest that would have accrued on the loan in respect of the year of income if the interest was calculated on the daily balance of the loan at the benchmark interest rate in relation to the year of income. benchmark interest rate, in relation to a year of income, means the predominant per cent per annum interest rate on new, variable interest rate housing loans to individuals for owner‑occupation that is specified, for the June immediately preceding the financial year to which the year of income relates, in the “Interest Rates and Yields: Banks” table in the Statistical Directory of the Reserve Bank of Australia Bulletin dated July in that financial year. deferred interest loan means a loan in respect of which interest is payable at a rate exceeding nil, other than:  (a) a loan where the whole of the interest is due for payment within 6 months after the loan is made; or  (b) a loan where:  (i) the interest is payable by instalments; and  (ii) the intervals between instalments do not exceed 6 months; and  (iii) the first instalment is due for payment within 6 months after the loan is made. investment means any mode of application of money for the purpose of gaining a return. loan includes:  (a) an advance of money; and  (b) the provision of credit or any other form of financial accommodation; and  (c) the payment of an amount for, on account of, on behalf of or at the request of a person where there is an obligation (whether express or implied) to repay the amount; and  (d) a transaction (whatever its terms or form) which in substance effects a loan of money. loan benefit has the meaning given by subsection (4). person means any of the following:  (a) a company;  (b) a partnership;  (c) a person in the capacity of trustee;  (d) any other person. provide:  (a) in relation to property—includes dispose of (whether by assignment, declaration of trust or otherwise); and  (b) in relation to services—includes allow, confer, give, grant or perform. recipient’s contribution, in relation to property or services, means the amount of any consideration paid to the provider by the recipient in respect of the provision of the property or services, reduced by the amount of any reimbursement paid to the recipient in respect of that consideration. return, in relation to an investment, includes interest, income or profit. services includes any benefit, right (including a right in relation to, and an interest in, real or personal property), privilege or facility and, without limiting the generality of the foregoing, includes a right, benefit, privilege, service or facility that is, or is to be, provided under:  (a) an arrangement for or in relation to:  (i) the performance of work (including work of a professional nature), whether with or without the provision of property; or  (ii) the provision of, or the use of facilities for, entertainment, recreation or instruction; or  (iii) the conferring of rights, benefits or privileges for which remuneration is payable in the form of a royalty, tribute, levy or similar exaction; or  (b) a contract of insurance; or  (c) an arrangement for or in relation to the lending of money. unreimbursed expenditure means expenditure no part of which has been reimbursed. unreimbursed interest means interest no part of which has been reimbursed. 26BB  Assessability of gain on disposal or redemption of traditional securities acquire, in relation to a security, means acquire, on issue, purchase, transfer, assignment or otherwise, the security or the right to receive payment of the amount or amounts payable under the security. connected entity has the same meaning as in the Income Tax Assessment Act 1997. dispose, in relation to a security, means sell, transfer, assign or dispose of in any way the security or the right to receive payment of the amount or amounts payable under the security. eligible return has the same meaning as in Division 16E. periodic interest has the same meaning as in Division 16E. security has the same meaning as in Division 16E. traditional security, in relation to a taxpayer, means a security held by the taxpayer that:  (a) is or was acquired by the taxpayer after 10 May 1989;  (b) either:  (i) does not have an eligible return; or  (ii) has an eligible return, where:  (A) the precise amount of the eligible return is able to be ascertained at the time of issue of the security; and  (B) that amount is not greater than 11/2 % of the amount calculated in accordance with the formula:      Payments is the amount of the payment or of the sum of the payments (excluding any periodic interest) liable to be made under the security when held by any person; and   Term is the number (including any fraction) of years in the term of the security; and  (d) is not trading stock of the taxpayer.  (2) Where a taxpayer disposes of a traditional security or a traditional security of a taxpayer is redeemed, the amount of any gain on the disposal or redemption shall be included in the assessable income of the taxpayer of the year of income in which the disposal or redemption takes place.  (3) Where the Commissioner, having regard to any connection between the parties to the transaction by which the taxpayer disposed of the traditional security or by which it was redeemed, or by which the taxpayer acquired the traditional security, is satisfied that the parties were not dealing with each other at arm’s length in relation to the transaction, then, for the purposes of determining under subsection (2) the amount of any gain on the disposal or redemption, the consideration for the transaction shall be taken to be:  (a) the amount that might reasonably be expected for the transaction if the parties were independent parties dealing at arm’s length with each other; or  (b) where, for any reason it is not possible or practicable for the Commissioner to ascertain that amount—such amount as the Commissioner determines.  (4) Subsection (2) does not apply to a gain on the disposal or redemption of a traditional security if:  (a) the disposal or redemption occurs because the traditional security is converted into ordinary shares in a company that is:  (b) the traditional security was issued on the basis that it will or may convert into ordinary shares in:  (ii) the connected entity.  (5) Subsection (2) does not apply to a gain on the disposal or redemption of a traditional security if:  (a) the disposal or redemption is in exchange for ordinary shares in a company that is neither:  (i) the issuer of the traditional security; nor  (b) in the case of a disposal—the disposal is to:  (c) the traditional security was issued on the basis that it will or may be:  (i) disposed of to the issuer of the traditional security or to the connected entity; or  (ii) redeemed;   in exchange for ordinary shares in the company. 26BC  Securities lending arrangements convertible note:  (a) in relation to a company—has the same meaning as in Division 3A; or  (b) in relation to a unit trust—means a note issued by the trustee of the unit trust, being a note that, if the unit trust were a company, would be a convertible note issued by the company, and includes a note that would be a convertible note within the meaning of Division 3A if:  (i) references in that Division to a company were references to a unit trust, or to the trustee of the unit trust, as the context requires; and  (ii) references in that Division to shares were references to units. debenture, in relation to a unit trust, means an instrument issued by the trustee of the unit trust, being an instrument that, if the unit trust were a company, would be a debenture issued by the company. distribution includes:  (a) interest; or  (b) a dividend; or  (c) a share issued by a company to a shareholder in the company where the share is issued:  (i) as a bonus share; or  (ii) in the circumstances mentioned in subsection 6BA(1); or  (d) an amount credited by the trustee of a unit trust to a unit holder as a unit holder; or  (e) a unit issued by the trustee of a unit trust to which section 130‑20 of the Income Tax Assessment Act 1997 applies (apart from subsection (4) of that section). eligible security means:  (a) a share, bond, debenture, convertible note, right, option or similar financial instrument issued by a public company; or  (b) a unit, bond, debenture, convertible note, right, option or similar financial instrument issued by the trustee of:  (i) a listed unit trust; or  (ii) a unit trust any of the units of which were offered to the public; or  (c) a bond, debenture, right, option or similar financial instrument issued by a government or by an authority of a government. government means:  (a) the Commonwealth, a State or a Territory; or  (b) the government of, or of a part of, a foreign country. listed company means a company any of the shares of which are listed for quotation in the official list of a stock exchange in Australia or elsewhere. listed unit trust means a unit trust any of the units of which are listed for official quotation in the official list of a stock exchange in Australia or elsewhere. option:  (a) in relation to a company—means an option to acquire shares in the company; or  (b) in relation to a unit trust—means an option to acquire units in the unit trust; or  (c) in relation to a government or an authority of a government—means an option to acquire a bond, debenture or similar financial instrument issued by the government or by the authority. public company means:  (a) a listed company; or  (b) a mutual life assurance company; or  (c) a company in which a government or an authority of a government has a controlling interest; or  (d) a company that is a 100% subsidiary of a company covered by paragraph (a), (b) or (c). right:  (a) in relation to a company—means a right to acquire shares in the company or to acquire an option; or  (b) in relation to a unit trust—means a right to acquire units in the unit trust or to acquire an option; or  (c) in relation to a government or an authority of a government—means a right to acquire a bond, debenture or similar financial instrument issued by the government or by the authority or to acquire an option.  (2) If an eligible security is held by a person as trustee for another person who is absolutely entitled to the eligible security as against the trustee, this section applies as if the eligible security were vested in the other person and any acts of the trustee were the acts of that other person.  (3) This section applies where:  (a) under a written agreement of the kind known as a securities lending arrangement, being an agreement that was entered into after 9 May 1990:  (i) at a particular time (in this section called the original disposal time), a taxpayer (in this section called the lender) disposed of an eligible security (in this section called the borrowed security) to another taxpayer (in this section called the borrower); and  (ii) at a later time (in this section called the re‑acquisition time), being less than 12 months after the original disposal time, the lender:  (A) re‑acquired the borrowed security (which re‑acquired security is in this section called the  replacement security) from the borrower; or  (B) acquired an identical security (which acquired security is in this section also called the replacement security) from the borrower; and  (b) both the borrower and the lender were dealing with each other at arm’s length in relation to each of the transactions mentioned in paragraph (a); and  (c) if any of the following events occurred during the period (in this section called the borrowing period) commencing at the original disposal time and ending at the re‑acquisition time:  (i) the making or payment of a distribution (whether in property or money) in respect of the borrowed security;  (ii) the issue, by the company, trustee, government or government authority concerned, of a right or option in respect of the borrowed security;  (iii) if the borrowed security is a right or option:  (A) the giving of a direction by the lender to the borrower to exercise the right or option; or  (B) the giving of a direction by the lender to the borrower to exercise an identical right or option;   then (even if the event occurred after the borrowed security was disposed of by the borrower to a third party), the lender receives from the borrower, under the agreement:  (iv) if subparagraph (i) applies:  (A) the distribution; or  (B) if the distribution is in property—identical property; or  (C) a payment (in this section called the compensatory payment) equal to the value to the lender of the distribution; or  (v) if subparagraph (ii) applies:  (A) the right or option; or  (B) an identical right or option; or  (C) a payment (in this section also called the compensatory payment) equal to the value to the lender of the right or option; or  (vi) if subparagraph (iii) applies:  (A) the shares, units, bonds, debentures or financial instruments that resulted from exercising the right or option; or  (B) shares, units, bonds, debentures or financial instruments that are identical to those that resulted from, or that would have resulted from, exercising the right or option; or  (C) a payment (in this section also called the compensatory payment) equal to the value to the lender of the shares, units, bonds, debentures or financial instruments that resulted from, or would have resulted from, exercising the right or option; and  (d) if the total consideration payable or to be given by the borrower under the agreement consists of:  (i) the transfer of, or the promise to transfer, the replacement security or replacement securities concerned; and  (ii) other consideration (in this paragraph called the notifiable consideration);   the agreement contains:  (iii) if the notifiable consideration is wholly covered by one of the following categories:  (A) a fee;  (B) an adjustment for variations in the market value of eligible securities;  (C) other consideration;   a statement specifying the category concerned and setting out such information as will enable the amount or value of the notifiable consideration to be readily ascertained; or  (iv) if the notifiable consideration is covered by 2 or more of the following categories:  (A) a fee;  (B) an adjustment for variations in the market value of eligible securities;  (C) other consideration;   a statement dissecting the notifiable consideration into those categories in such a manner as will enable the amount or value of each category to be readily ascertained; and  (e) the lender does not dispose of (by transfer, declaration of trust or otherwise) the right to receive any part of the total consideration payable or to be given by the borrower under the agreement.  (3A) For the purposes of paragraph (3)(c), if, apart from this subsection, either of the following events occurred after the commencement of the borrowing period:  (a) the making or payment of a distribution (whether in property or money) in respect of the borrowed security;  (b) the issue, by the company, trustee, government or government authority concerned, of a right or option in respect of the borrowed security; (even if the event occurred after the borrowed security was disposed of by the borrower to a third party), the event is taken to have occurred during the borrowing period if, and only if, (assuming that the borrower had held the borrowed security at all times during the borrowing period) the entitlement to the distribution or issue would have been attributable to the borrower’s holding of the borrowed security at a particular time during the borrowing period.  (4) In determining:  (a) whether an amount (other than a fee payable under the securities lending arrangement) is included in the assessable income of the lender under a provision of this Act other than Part 3‑1 or 3‑3 of the Income Tax Assessment Act 1997 (about CGT); or  (b) whether an amount is allowable as a deduction to the lender; in respect of either or both of the transactions covered by paragraph (3)(a), the lender is to be treated as if:  (c) neither of those transactions had been entered into; and  (d) the lender had held the borrowed security at all times during the borrowing period; and  (e) if the replacement security is not the borrowed security—the replacement security were the borrowed security.  (4A) If the lender receives a compensatory payment covered by sub‑subparagraph (3)(c)(v)(C), then, in determining whether an amount is included in the assessable income of the lender under a provision of this Act other than Part 3‑1 or 3‑3 of the Income Tax Assessment Act 1997, the lender is to be treated as if:  (a) the lender had held the borrowed security at all relevant times during the borrowing period; and  (b) the right or option had been issued directly to the lender in respect of the borrowed security; and  (c) the lender had disposed of the right or option immediately after its issue for a consideration equal to the compensatory payment.  (4B) If the lender receives a compensatory payment covered by sub‑subparagraph (3)(c)(vi)(C), then, in determining whether an amount is included in the assessable income of the lender under a provision of this Act other than Part 3‑1 or 3‑3 of the Income Tax Assessment Act 1997, the lender is to be treated as if:  (a) the lender had held the right or option at all relevant times during the borrowing period; and  (b) the lender had exercised the right or option; and  (c) the lender had immediately disposed of the shares, units, bonds, debentures or financial instruments that resulted from exercising the right or option for a consideration equal to the compensatory payment.  (5) In determining:  (a) whether an amount is included in the assessable income of the borrower under a provision of this Act other than Part 3‑1 or 3‑3 of the Income Tax Assessment Act 1997; or  (b) an amount (other than a fee payable under the securities lending arrangement) is allowable as a deduction to the borrower; in respect of either or both of the transactions covered by paragraph (3)(a):  (c) if the borrowed security was disposed of by the borrower to a third party:  (i) the borrower is to be treated as if the borrower had acquired the borrowed security from the lender for a consideration equal to the market value of the borrowed security at the time of its acquisition; and  (ii) the borrower is to be treated as if the borrower had disposed of the replacement security to the lender for a consideration equal to the market value of the borrowed security at the time of its acquisition from the lender; or  (d) in any other case—the borrower is to be treated as if neither of the transactions referred to in paragraph (3)(a) had been entered into.  (6) Any capital gain or capital loss from the disposal of the borrowed security by the lender is disregarded.  (6A) If the lender acquired the borrowed security before 20 September 1985, the lender is taken (for the purposes of Parts 3‑1 and 3‑3 of the Income Tax Assessment Act 1997) to have acquired the replacement security before that day.  (6B) If the lender acquired the borrowed security on or after 20 September 1985, the first element of the cost base of the replacement security is the cost base of the borrowed security just before the acquisition of the replacement security. The reduced cost base of the replacement security is worked out similarly.  (7) If:  (a) the borrowed security was acquired on or after 20 September 1985; and  (b) a CGT event (other than one involving a transaction covered by subsection (3)) happens in relation to the replacement security at least 12 months after the lender acquired a paired security in relation to the replacement security (otherwise than under a transaction covered by subsection (3)); section 114‑10 of the Income Tax Assessment Act 1997 (about the requirement for 12 months ownership) does not apply to the CGT event.  (8) For the purposes of subsection (7):  (a) if CGT event A1 happens (involving a transaction covered by subsection (3)) by the lender disposing of an eligible security to the borrower, that security is a paired security in relation to the replacement security subsequently acquired or re‑acquired by the lender; and  (b) a security is a paired security in relation to a second security if the first security is a paired security in relation to a third security that is a paired security in relation to the second security (including a pairing with the second security by another application or other applications of this paragraph).  (9) For the purpose of applying Parts 3‑1 and 3‑3 of the Income Tax Assessment Act 1997 to the borrower:  (a) if the borrower disposes of the borrowed security to a third party:  (i) the first element of the cost base and reduced cost base of the borrowed security (in the hands of the borrower) is taken to be its market value when the borrower acquired it; and  (ii) when the borrower disposes of a replacement security to the lender, the capital proceeds from that CGT event are taken to be that market value; and  (b) if no third party is involved—the transactions referred to in paragraph (3)(a) are ignored.  (9A) For the purpose of applying Parts 3‑1 and 3‑3 of the Income Tax Assessment Act 1997 to the borrower, the incidental costs to the borrower of the acquisition of an eligible security covered by sub‑subparagraph (3)(a)(ii)(B) include a compensatory payment incurred by the borrower (to the extent that the borrower has not deducted and cannot deduct it).  (9B) For the purposes of the application of Parts 3‑1 and 3‑3 of the Income Tax Assessment Act 1997 to a right or option received by the lender as mentioned in subparagraph (3)(c)(v), the borrower and lender are to be treated as if the eligible security in respect of which the right or option was issued had been held by the lender at the time of the acquisition of the right or option.  (9C) For the purposes of the application of Parts 3‑1 and 3‑3 of the Income Tax Assessment Act 1997 to a share, unit, bond, debenture or financial instrument received by the lender as mentioned in subparagraph (3)(c)(vi), the borrower and the lender are to be treated as if:  (a) the share, unit, bond, debenture or financial instrument had been received as the result of the exercise of the borrowed security; and  (b) the borrowed security had been held by the lender at the time of the exercise; and  (c) the lender had exercised the borrowed security; and  (d) the lender had exercised the borrowed security at the time the direction concerned was given; and  (e) the amount of the contribution (if any) made by the lender to the borrower in respect of the carrying out of the direction were an amount paid as consideration by the lender in respect of the exercise.  (9D) If a distribution covered by subparagraph (3)(c)(i) consists of one or more shares issued by a company to the borrower or to a third party in the circumstances mentioned in subsection 6BA(1), then, for the purposes of the application of Parts 3‑1 and 3‑3 of the Income Tax Assessment Act 1997 to a share (in this subsection called the notional bonus share) received by the lender in relation to the distribution in the circumstances mentioned in sub‑subparagraph (3)(c)(iv)(A) or (B), the borrower and the lender are to be treated as if:  (a) the company had issued the notional bonus share to the lender instead of the borrower or the third party, as the case requires; and  (b) the notional bonus share had been issued in the circumstances mentioned in subsection 6BA(1); and  (c) the notional bonus share had been issued in respect of the borrowed security; and  (d) the lender had held the borrowed security at the time the notional bonus share was issued.  (9E) If a distribution covered by subparagraph (3)(c)(i) consists of one or more units issued by the trustee of a unit trust to the borrower or to a third party in the circumstances covered by section 130‑20 of the Income Tax Assessment Act 1997, then, for the purposes of the application of Parts 3‑1 and 3‑3 of the Income Tax Assessment Act 1997 to a unit (in this subsection called the notional bonus unit) received by the lender in relation to the distribution in the circumstances mentioned in sub‑subparagraph (3)(c)(iv)(A) or (B), the borrower and the lender are to be treated as if:  (a) the trustee had issued the notional bonus unit to the lender instead of the borrower or the third party, as the case requires; and  (b) the notional bonus unit had been issued in the circumstances covered by section 130‑20 of the Income Tax Assessment Act 1997; and  (c) the notional bonus unit had been issued in respect of the borrowed security; and  (d) the lender had held the borrowed security at the time the notional bonus unit was issued.  (9F) If the lender receives a compensatory payment covered by sub‑subparagraph (3)(c)(v)(C), then, for the purposes of the application of Parts 3‑1 and 3‑3 of the Income Tax Assessment Act 1997 to the lender, the lender is to be treated as if:  (a) the lender had held the borrowed security at all relevant times during the borrowing period; and  (b) the right or option had been issued directly to the lender in respect of the borrowed security; and  (c) the lender had disposed of the right or option immediately after its issue and had received capital proceeds of an amount equal to the compensatory payment.  (9G) If the lender receives a compensatory payment covered by sub‑subparagraph (3)(c)(vi)(C), then, for the purposes of the application of Parts 3‑1 and 3‑3 of the Income Tax Assessment Act 1997 to the lender, the lender is to be treated as if:  (a) the lender had held the right or option at all relevant times during the borrowing period; and  (b) the lender had exercised the right or option; and  (c) the lender had immediately disposed of the shares, units, bonds, debentures or financial instruments that resulted from exercising the right or option and had received capital proceeds of an amount equal to the compensatory payment.  (11A) If:  (a) the lender receives from the borrower a distribution or identical property covered by subparagraph (3)(c)(iv); and  (b) assuming that the borrowed security had continued to be held by the lender, an amount (in this subsection called the otherwise assessable amount) would have been included in the lender’s assessable income of a year of income in respect of the distribution concerned; the lender’s assessable income of the year of income includes an amount equal to the otherwise assessable amount.  (11B) If:  (a) the lender receives from the borrower a compensatory payment covered by sub‑subparagraph (3)(c)(iv)(C); and  (b) assuming that the borrowed security had continued to be held by the lender, an amount (in this subsection called the otherwise assessable amount) would have been included in the lender’s assessable income of a year of income in respect of the distribution concerned; the lender’s assessable income of the year of income includes an amount equal to the otherwise assessable amount.  (12) Where:  (a) a taxpayer has entered into a transaction of a kind referred to in subparagraph (3)(a)(i); and  (b) at the time of making an assessment in respect of income of the taxpayer of the year of income in which the transaction occurred, the Commissioner is of the opinion that, at a later time, circumstances will exist because of which this section will apply in connection with that transaction; the Commissioner may apply the provisions of this section as if those circumstances existed at the time of making the assessment.  (13) Where:  (a) in the making of an assessment, this section has been applied on the basis that a circumstance that did not exist at the time of making the assessment would exist at a later time; and  (b) after the making of the assessment, the Commissioner becomes satisfied that the circumstance will not exist; then, in spite of anything in section 170, the Commissioner may amend the assessment at any time for the purpose of ensuring that this section is to be taken always to have applied on the basis that the circumstance did not exist. 26E  Income from RSAs  (1) All benefits provided in respect of, and amounts that are paid from, an RSA (including amounts taken to be paid from an RSA under subsection (2)) are taken to have an Australian source.  (2) If the premiums of an insurance policy are paid from an RSA, any amounts paid by the insurer under the policy are taken to be paid by the RSA provider as a benefit of the RSA. Subdivision AA—Non‑superannuation annuities etc. 27H  Assessable income to include annuities and superannuation pensions  (1) Subject to Division 54 of the Income Tax Assessment Act 1997, the assessable income of a taxpayer of a year of income shall include:  (a) the amount of any annuity derived by the taxpayer during the year of income excluding, in the case of an annuity that has been purchased, any amount that, in accordance with the succeeding provisions of this section, is the deductible amount in relation to the annuity in relation to the year of income; and  (b) the amount of any payment made to the taxpayer during the year of income as a supplement to an annuity, whether the payment is made voluntarily, by agreement or by compulsion of law and whether or not the payment is one of a series of recurrent payments. Note: Division 54 of the Income Tax Assessment Act 1997 provides a tax exemption for certain payments under structured settlements and structured orders.  (2) Subject to subsections (3) and (3A), the deductible amount in relation to an annuity derived by a taxpayer during a year of income is the amount (if any) ascertained in accordance with the   formula , where: A  is the relevant share in relation to the annuity in relation to the taxpayer in relation to the year of income. B  is the amount of the undeducted purchase price of the annuity. C  is:  (a) if there is a residual capital value in relation to the annuity and that residual capital value is specified in the agreement by virtue of which the annuity is payable or is capable of being ascertained from the terms of that agreement at the time when the annuity is first derived—that residual capital value; or  (b) in any other case—nil; and D  is the relevant number in relation to the annuity.  (3) Subject to subsection (3A), where the Commissioner is of the opinion that the deductible amount ascertained in accordance with subsection (2) is inappropriate having regard to:  (a) the terms and conditions applying to the annuity; and  (b) such other matters as the Commissioner considers relevant; the deductible amount in relation to the annuity derived by the taxpayer during the year of income is so much of the annuity as, in the opinion of the Commissioner, represents the undeducted purchase price having regard to:  (c) the terms and conditions applying to the annuity;  (d) any certificate or certificates of an actuary or actuaries stating the extent to which, in the opinion of the actuary or actuaries, the amount of the annuity derived by the taxpayer during the year of income represents the undeducted purchase price; and  (e) such other matters as the Commissioner considers relevant.  (3A) For the purposes of this section, where the annuity derived by a taxpayer during a year of income is part of an annuity of which a part has been commuted in the year of income or a preceding year of income, the deductible amount ascertained under subsection (2) or (3) shall be reduced by such amount as, in the opinion of the Commissioner, is appropriate having regard to:  (c) any deductible amount ascertained under this section in relation to the annuity in relation to a preceding year of income; and  (d) such other matters as the Commissioner considers relevant.  (4) In this section: actuary means a Fellow or Accredited Member of the Institute of Actuaries of Australia. agreement means any agreement, arrangement or understanding whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings. annuity means an annuity, a pension paid from a foreign superannuation fund (within the meaning of the Income Tax Assessment Act 1997) or a pension paid from a scheme mentioned in paragraph 290‑5(c) of that Act, but does not include:  (a) an annuity that is a qualifying security for the purposes of Division 16E; or  (b) a superannuation income stream (within the meaning of the Income Tax Assessment Act 1997). life expectation factor, in relation to a person in relation to an annuity, means the number of years in the complete expectation of life of the person as ascertained by reference to the prescribed Life Tables at the time at the beginning of the period to which the first payment of the annuity relates. purchase price means:  (a) in relation to a pension—the sum of:  (i) contributions made by any person to a foreign superannuation fund to obtain the pension; and  (ii) so much as the Commissioner considers reasonable of contributions made by any person to a foreign superannuation fund to obtain superannuation benefits including the pension; and  (b) in relation to an annuity other than a pension—the sum of:  (i) payments made solely to purchase the annuity; and  (ii) so much as the Commissioner considers reasonable of payments made to purchase the annuity and to obtain other benefits. relevant number, in relation to an annuity in relation to a year of income, means:  (a) where the annuity is payable for a term of years certain—the number of years in the term;  (b) where the annuity is payable during the lifetime of a person and not thereafter—the life expectation factor of the person; and  (c) in any other case—the number that the Commissioner considers appropriate having regard to the number of years in the total period during which the annuity will be, or may reasonably be expected to be, payable. relevant share, in relation to an annuity derived by a taxpayer during a year of income, means:  (a) in a case where the annuity derived by the taxpayer is a share of an annuity (which annuity is in this paragraph referred to as the total annuity) payable to the taxpayer and another person or other persons—the fraction ascertained by dividing the number of whole dollars in the amount of the annuity derived by the taxpayer during the year of income by the number of whole dollars in the amount of the total annuity derived during the year of income by the taxpayer and the other person or persons; or  (b) in any other case—the number 1. residual capital value, in relation to an annuity, means the capital amount payable on the termination of the annuity. undeducted purchase price, in relation to an annuity, has the meaning given by section 27A immediately before the commencement of Schedule 1 to the Superannuation Legislation Amendment (Simplification) Act 2007.  (5) In the definition of purchase price in subsection (4):  (a) a reference to contributions made by any person to a foreign superannuation fund to obtain a pension does not include a reference to contributions made to a foreign superannuation fund by an employer, or by another person under an agreement to which the employer is a party, for the purpose of providing superannuation benefits for, or for dependants of, an employee of the employer; and  (b) a reference to payments made to purchase, or solely to purchase, an annuity (other than a pension) does not include a reference to payments made by an employer, or by another person under an agreement to which the employer is a party, to purchase, or solely to purchase, the annuity for, or for dependants of, an employee of the employer.  (6) For the purposes of subsection (5), in determining whether a person is an employer of another person, treat the holding of an office by the other person as employment of that person. Subdivision D—Dividends