(c) requires the payment to be made before the doing of the thing; and
(d) cannot be escaped by unilateral action by the taxpayer.
Exception 5: agreement to which a product ruling applies
(9) The expenditure must not be under an agreement to which a product ruling applies, describing expenditure under the agreement as being allowable as a deduction.
(10) The product ruling must be made:
(a) on or before 1 pm (by legal time in the Australian Capital Territory) on 11 November 1999; or
(b) in response to an application for a product ruling where:
(i) the application was received by the Commissioner on or before the time specified in paragraph (a); and
(ii) the Commissioner acknowledged receiving the application.
(11) In this section:
product ruling means a public ruling made under Part IVAAA of the Taxation Administration Act 1953 about a particular investment product.
82KZMF Proportional deduction
(1) If this section applies to expenditure incurred by a taxpayer in a year of income:
(a) the taxpayer cannot deduct all of the expenditure for the expenditure year; and
(b) instead, the taxpayer can deduct, for each year of income during which part of the eligible service period for the expenditure occurs, an amount worked out using this formula:
Start formula Expenditure times start fraction Number of days of eligible service period in the year of income over Total number of days of eligible service period end fraction end formula
(2) This section has effect:
(a) despite section 8‑1 of the Income Tax Assessment Act 1997; and
(b) subject to Division 245 of the Income Tax Assessment Act 1997.
Note: Deductions under section 355‑205 or 355‑480 of the Income Tax Assessment Act 1997 for R&D expenditure are subject to this section (see subsection 8‑5(2) and section 355‑105 of that Act).
82KZMG Deductions for certain forestry expenditure
(1) Sections 82KZMD and 82KZMF do not affect the timing of a deduction for expenditure incurred by a taxpayer in a year of income (the expenditure year) to the extent that the requirements of this section are met.
General requirements for expenditure
(2) There are these requirements for the expenditure:
(a) it must be incurred on or after 2 October 2001 and on or before 30 June 2008 under an agreement; and
(b) the eligible service period for the expenditure must be 12 months or shorter and must end on or before the last day of the year of income after the expenditure year; and
(c) it must be incurred in return for the doing of a thing under the agreement that is not to be wholly done within the expenditure year.
Requirements for agreement
(3) There are these requirements for the agreement:
(a) the agreement must be for planting and tending trees for felling; and
(b) the taxpayer must not have day to day control over the operation of the agreement (whether or not the taxpayer has the right to be consulted or give directions); and
(c) at least one of these must be satisfied:
(i) there is more than one participant in the agreement in the same capacity as the taxpayer;
(ii) the person (the manager) who manages, arranges or promotes the agreement, or an associate of that person, manages, arranges or promotes similar agreements for other taxpayers.
Requirements for expenditure
(4) The expenditure incurred by the taxpayer must be paid for seasonally dependent agronomic activities undertaken by the manager during the establishment period for the relevant planting of trees for felling.
Example: Examples of seasonally dependent agronomic activities include:
tending the seedlings prior to planting, and planting them;
ripping and mounding the site where the planting is to occur;
applying fertiliser, herbicide or pesticide in conjunction with the planting.
(5) The establishment period for a particular planting of trees starts on the day when the first seasonally dependent agronomic activity for that planting is done and ends on the later of:
(a) the day when the last seedling is planted as part of that planting, not including replacement of seedlings already planted; and
(b) the day when any fertiliser, herbicide or pesticide is applied to the seedlings in conjunction with that planting.
82KZMGA Deductions for certain forestry expenditure
(1) A taxpayer cannot deduct expenditure in relation to which the requirements in section 82KZMG (apart from paragraph 82KZMG(2)(a)) are met if:
(a) the taxpayer holds the taxpayer’s interest in the agreement mentioned in section 82KZMG as an initial participant in the agreement; and
(b) a CGT event happens in relation to that interest within 4 years after the end of the year of income in which the taxpayer first incurred expenditure under the agreement; and
(c) the expenditure is incurred on or before 30 June 2008.
(1A) Paragraph (1)(b) does not apply to a CGT event if:
(a) the CGT event happens because of circumstances outside the taxpayer’s control; and
Example: The interest is compulsorily acquired.
(b) when the taxpayer acquired the interest, the taxpayer could not reasonably have foreseen the CGT event happening.
(2) Despite section 170, the Commissioner may amend the taxpayer’s assessment at any time within 2 years after the end of the year of income in which the CGT event happens, for the purpose of giving effect to this section.
82KZMGB CGT event in relation to interest in 82KZMG agreement
(1) This section applies if:
(a) a taxpayer holds an interest in an agreement mentioned in section 82KZMG as an initial participant in the agreement; and
(b) at least one of these conditions is satisfied:
(i) the taxpayer can deduct or has deducted an amount for a year of income in relation to the interest;
(ii) the condition in subparagraph (i) would be satisfied if section 82KZMGA were disregarded; and
(c) subsection 82KZMG(1) applies to the timing of the deduction (or would apply if section 82KZMGA were disregarded); and
(d) a CGT event happens in relation to the interest, other than a CGT event that happens in respect of thinning.
(2) The taxpayer’s assessable income for the year of income in which the CGT event happens includes:
(a) if, as a result of the CGT event, the taxpayer no longer holds the interest—the market value of the interest (worked out as at the time of the event); or
(b) otherwise—the decrease (if any) in the market value of the interest as a result of the CGT event.
(3) Any amount that the taxpayer actually receives because of the CGT event is not included in the taxpayer’s assessable income (nor is it exempt income).
82KZN Transfer etc. of rights under agreement
Where:
(a) under an agreement entered into either before or after the commencement of this section, a taxpayer (in this section called the original taxpayer) incurs expenditure in return for the doing of a thing during a period after the incurring of the expenditure; and
(b) either:
(i) the original taxpayer transfers to another taxpayer (in this section called the recipient taxpayer) all of his or her rights under the agreement in relation to the doing of the thing during the remainder of the period; or
(ii) the agreement is discharged (whether by performance or otherwise) in so far as it relates to the doing of the thing during the remainder of the period;
the following provisions have effect for the purpose of this Subdivision:
(c) if the whole or part of a deduction under former section 51 of this Act or section 8‑1 of the Income Tax Assessment Act 1997 in respect of the expenditure is, because of this Subdivision, allowable from the assessable income of the original taxpayer of any year of income occurring after the year of income in which the transfer or discharge occurs—that deduction is instead allowable from the assessable income of the year of income in which the transfer, assignment or discharge occurs;
(d) if the recipient taxpayer incurs expenditure in return for the transfer—the recipient taxpayer shall be taken to have incurred, under an agreement entered into at the time of the transfer, so much of that expenditure as is not of a capital, private or domestic nature in return for the doing of the thing during the remainder of the period.
82KZO Partnership changes where entire interest in agreement rights is not transferred
Where:
(a) under an agreement entered into after 25 May 1988, a person (in this section called the original person), or the partners in a partnership (in this section called the original partnership), incurs or incur expenditure in return for the doing of a thing during a period after the incurring of the expenditure;
(b) either of the following (in this section called a partnership change) happens:
(i) a partnership is formed or the original partnership is dissolved, or both; or
(ii) the constitution of the original partnership, or the interests of the partners in the original partnership, is or are varied;
with the result that, after the partnership change:
(iii) a person (in this section called the later person), or the partners in a partnership (in this section called the later partnership), holds or hold all of any rights under the agreement to have the thing done during the period after the partnership change; and
(iv) the original person, or one or more of the partners in the original partnership, has an interest in the rights after the partnership change; and
(c) the whole or part of a deduction under former section 51 of this Act or section 8‑1 of the Income Tax Assessment Act 1997 in respect of the expenditure (which whole or part is in this section called a spread deduction) is, because of the application of this Subdivision, allowable from the assessable income of the original person or the original partnership of the year of income in which the partnership change happens or a subsequent year of income;
the following provisions have effect:
(d) if a spread deduction is allowable in relation to the year of income in which the partnership change occurs—the entitlement to the deduction shall, for the purposes of this Act but subject to any later application of this section, be apportioned between the original person or original partnership and the later person or later partnership according to the portions of the eligible service period in the year of income (or, if the case requires, of so much of the period as occurs after a partnership change resulting from a previous application of this section) that occur before and after the partnership change;
(e) if a spread deduction relates to a subsequent year of income—the later person or later partnership, instead of the original person or original partnership, shall, for the purposes of this Act but subject to any later application of this section, be entitled to the deduction;
(f) for the purposes of any later application of this section or section 82KZN, the later person or later partnership, instead of the original person or original partnership, shall be taken to have incurred the expenditure under the agreement.
Division 3A—Convertible notes
82LA Application of Division
(1) This Division applies only for the purposes of:
(a) calculating an eligible CFC’s attributable income for the purposes of Part X; and
(b) defining convertible note.
(2) A term used in paragraph (1)(a) has the same meaning as it has when used in Part X.
82L Interpretation
(1) In this Division, unless the contrary intention appears:
attributable income has the meaning given by Division 7 of Part X.
CFC or controlled foreign company has the meaning given by section 340.
convertible note includes a note issued by a company that provides, whether in pursuance of or by virtue of a trust deed or otherwise:
(a) that the amount of the loan to the company that is evidenced, acknowledged or created by the note or to which the note relates:
(i) whether with or without interest;
(iii) whether at the option of the holder or owner of the note or of some other person or not;
(iv) whether in whole or in part; or
(v) whether exclusively or otherwise;
is to be or may be converted into shares in the capital of the company or of another company or is to be or may be redeemed, repaid or satisfied by:
(vi) the allotment or transfer of shares in the capital of the company or of some other company, whether to the holder or owner of the note or to some other person;
(vii) the acquisition of such shares, whether by the holder or owner or by some other person, otherwise than as mentioned in subparagraph (vi); or
(viii) application in or towards paying‑up, in whole or in part, the balance unpaid on shares issued or to be issued by the company or by some other company, whether to the holder or owner or to some other person; or
(b) that the holder or owner of the note is to have, or may have, any right or option to have allotted or transferred to him or her or to some other person, or for him or her or some other person otherwise to acquire, shares in the capital of the company or of some other company.
foreign loan means a loan to a company raised outside Australia in a currency other than the currency of Australia.
instrument includes debenture, bond, certificate, receipt or any other document or writing.
issued includes given and executed, and issue has a corresponding meaning.
loan, in relation to a company, means:
(a) a loan, advance or deposit of money to or with the company;
(b) money subscribed to the company; or
(c) any other form of debt or liability of the company;
whether secured or unsecured and whenever redeemable, repayable or to be satisfied.
note means a note or other instrument issued by a company that evidences, acknowledges, creates or relates to a loan to the company.
prescribed stock exchange means an approved stock exchange (within the meaning of the Income Tax Assessment Act 1997) operating in Australia.
qualified person, in relation to the valuing of a share in the capital of a company, means a person registered as a company auditor under a law in force in a State or a Territory, but does not include:
(a) a director, secretary or employee of the company;
(b) a partner, employer or employee of a person referred to in paragraph (a); or
(c) a partner or employee of an employee of a person so referred to.
the date of offer, in relation to a loan to a company means the earliest date on which, by any relevant prospectus, notice, circular, advertisement or other written invitation, any person was or persons were invited to subscribe to the loan:
(a) in the case of a new loan—by the payment of money to the company; or
(b) in the case of an approved replacement loan—by converting, in whole or in part, an earlier loan, or by converting, in whole or in part, an earlier loan and the payment of money to the company.
the maturity date, in relation to a loan to which a convertible note applies, means the date by which the whole of the loan is, under the terms applicable to the note, to be repaid, redeemed or satisfied.
the relevant valuation period, in relation to a share, means:
(a) where neither paragraph (b) nor (c) applies in relation to the share—the period of one month ending on the date that is the valuation date in relation to the share;
(b) where:
(i) the share is included in a class of shares that, during the whole of the period of 2 months ending on the valuation date, was listed for quotation in the official list of a stock exchange that was a prescribed stock exchange during the whole of that period of 2 months, or in the official lists of 2 or more stock exchanges each of which was a prescribed stock exchange during the whole of that period of 2 months; and
(ii) fully paid shares included in that class of shares were not recorded by that stock exchange or by any of those stock exchanges, as the case may be, as having been sold during the period of one month specified in paragraph (a) but were recorded by that stock exchange or by one or more of those stock exchanges, as the case may be, as having been sold during the period of one month immediately preceding the commencement of the period of one month so specified;
that preceding period of one month; or
(c) where:
(i) the share is included in a class of shares that, during the whole of the period of 3 months ending on the valuation date, was listed for quotation in the official list of a stock exchange that was a prescribed stock exchange during the whole of that period of 3 months, or in the official lists of 2 or more stock exchanges each of which was a prescribed stock exchange during the whole of that period of 3 months; and
(ii) fully paid shares included in that class of shares were not recorded by that stock exchange or by any of those stock exchanges, as the case may be, as having been sold during the period of 2 months ending on the valuation date but were recorded by that stock exchange or by one or more of those stock exchanges, as the case may be, as having been sold during the period of one month immediately preceding the commencement of that period of 2 months;
that preceding period of one month.
the valuation date, in relation to a share, means the date that is earlier by 6 weeks than the date that is the date of offer in relation to the loan in respect of which the value of the share is to be ascertained.
(2) Where the combined effect or operation of 2 or more related instruments, whether issued at the same time or not, would have the effect or operation of a convertible note, those instruments shall, for the purposes of this Division, be deemed to be together a convertible note.
(3) Where:
(a) a company issues a note that provides that the amount of the loan to the company that is evidenced, acknowledged or created by the note or to which the note relates:
(i) whether with or without interest;
(iii) whether at the option of the holder or owner of the note or of some other person or not;