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.
(8) Where:
(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
(1) Where:
(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.
(3) In this section:
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
(1) Where:
(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