Income Tax Assessment Act 1997

Taxable income equals assessable income minus deductions under section 4-15, with an amount of ordinary or statutory income having only one status in the hands of a particular entity under section 6-1. Assessable income comprises ordinary income derived from all sources for Australian residents or Australian sources for foreign residents under section 6-5, together with statutory income under section 6-10 and specific inclusions listed in the table in section 10-5 and Division 15, such as accrued leave transfer payments under section 15-5, bounties and subsidies under section 15-10, insurance or indemnity for loss of assessable income under section 15-30, and benefits under life insurance policies under sections 15-55 and 15-60. Exempt income is not assessable income under section 6-20, with entity-based exemptions in the table in section 11-5 covering registered charities, public authorities and scientific institutions, and kind-based exemptions in the table in section 11-15 covering Defence Force allowances under section 51-5, social security payments under Subdivision 52-A, venture capital gains under sections 51-52, 51-54 and 51-55, and disaster relief payments under sections 51-125 and 59-55. Non-assessable non-exempt income is listed in section 11-55, including alienated personal services income under sections 86-30 and 86-35, foreign equity distributions under section 768-5, GST payable on taxable supplies under section 17-5, superannuation benefits under Divisions 301 to 306, and coronavirus economic response payments under sections 59-95 to 59-98. Deductions are available under section 8-1 to the extent a loss or outgoing is incurred in gaining or producing assessable income or necessarily incurred in carrying on a business for that purpose, but not to the extent it is capital, private or domestic, relates to exempt or non-assessable non-exempt income, or is prevented by another provision. Specific deductions are listed in section 12-5 and Division 25, including repairs under section 25-10, bad debts under section 25-35, tax-related expenses under section 25-5, work in progress amounts under section 25-95, and capital expenditure to terminate leases under section 25-110 spread over five years. Division 26 denies deductions for penalties payable under Australian or foreign law or court orders on conviction under section 26-5, including the general interest charge and shortfall interest charge, bribes to foreign public officials under section 26-52 and public officials under section 26-53, losses or outgoings relating to indictable offences under section 26-54, related entity payments beyond the amount the Commissioner considers reasonable under section 26-35, leisure facility expenses under section 26-50, vacant land holding expenses under section 26-102 unless a substantial and permanent structure exists with independent purpose, and failures to withhold under sections 26-25, 26-25A and 26-105. Recoupments of deductible losses or outgoings are included in assessable income under Subdivision 20-A where the expense is deductible under any provision or under a listed provision in section 20-30, with recoupment defined in section 20-25 to include reimbursements, refunds, insurance, indemnity, grants and remitted general interest charge or shortfall interest charge. For single-year deductions the inclusion is capped at the amount of the loss or outgoing under section 20-35, while for multi-year deductions the method statement in section 20-40 limits inclusion to outstanding deductions. Subdivision 20-B includes the smaller of profit on disposal, total deductible lease payments or notional depreciation for leased cars designed mainly for passengers. GST payable on taxable supplies and increasing adjustments are excluded from assessable income under section 17-5, while input tax credits and decreasing adjustments are disregarded in calculating deductions under section 27-5. Car expenses under Division 28 are defined in section 28-13 to include operating costs and decline in value but exclude travel outside Australia and taxi fares, with the cents per kilometre method limited to 5,000 business kilometres under section 28-25 and the log book method requiring a 12-week continuous period, odometer records and written estimate under sections 28-120 to 28-140. Tax offsets are listed in section 13-1, including dependants under Subdivision 61-A, dividends under section 207-20(2), foreign income tax under Division 770, franking deficit tax under section 205-70, R&D under Division 355, and zone residents under section 79A. Division 30 allows deductions for gifts or contributions to funds, authorities or institutions described in the tables in Subdivision 30-B, subject to special conditions such as registered charity status, maintenance of a gift fund under section 30-130, and endorsement under section 30-125 requiring an ABN, description in item 1, 2 or 4 of the table in section 30-15, and winding-up or transfer rules in subsection 30-125(6). Conservation covenants under Division 31 must be perpetual, restrict activities degrading environmental value, be registered on title where possible, and be approved by or under a program approved by the Environment Minister, with the deduction being the market value decrease attributable to the covenant. Entertainment under section 32-10 means food, drink or recreation or accommodation or travel connected with such, even where business discussions occur, with exceptions in the tables in sections 32-30 to 32-50 for fringe benefits, in-house dining facilities not at social functions, seminars of at least four hours not being business meetings, and promotion to the public. Non-compulsory uniforms under Division 34 are sets of clothing that as a set distinctively identify the wearer as associated with the employer or group, and are non-compulsory unless the employer consistently enforces a policy requiring wearing and prohibiting substitution except in special circumstances. Non-commercial business activities under Division 35 are those carried on by an individual alone or in partnership where attributable deductions exceed assessable income from the activity, with deferral unless the income requirement in section 35-10(2E) is met and one of the tests in sections 35-30 to 35-45 applies or the Commissioner exercises discretion under section 35-55. Tax losses under Division 36 arise where deductions exceed assessable income reduced by net exempt income under section 36-10, and are deductible in later years in order of incurrence under section 36-15, with corporate tax entities able to choose the amount under section 36-17 subject to limits on excess franking offsets.

The Act applies to each individual and company, and to other entities listed in the table in section 9-1, including trustees of attribution managed investment trusts, superannuation providers such as complying and non-complying funds, sovereign entities, corporate limited partnerships, and trustees in respect of certain trust income. The expression "you" applies to entities generally unless expressly limited under section 4-5. For some entities income tax is worked out by reference to something other than taxable income under section 9-5, including certain group members and superannuation providers on no-TFN contributions income. Division 28 applies to individuals and partnerships containing at least one individual claiming car expense deductions, with exceptions for particular cars taken on hire under section 28-165 and for cars used in particular ways such as panel vans or taxis under section 28-170. Subdivision 20-B applies to disposals of cars designed mainly for passengers where lease payments have been deducted by the lessee or associate under section 20-125. Provisions in Division 15 apply to recipients of royalties, mining information, work in progress amounts, and life insurance benefits. Tax offsets in section 13-1 affect individuals, trustees, and entities claiming items such as private health insurance offsets under Subdivision 61-G or zone offsets under section 79A. Division 30 affects taxpayers making gifts or contributions to funds, authorities or institutions listed in the tables in Subdivision 30-B, including public hospitals, universities, approved research institutes, registered public benevolent institutions, environmental organisations, cultural organisations, and specific named entities such as the Australian Sports Foundation, Girl Guides Australia, the Scout Association of Australia, the Australian Conservation Foundation Incorporated, Greening Australia Limited, Landcare Australia Limited, the Australian Institute of International Affairs, the Lowy Institute for International Policy, the Connellan Airways Trust, the Winston Churchill Memorial Trust, The Australiana Fund, the Council for Jewish Community Security and the Foundation for Rural and Regional Renewal Public Fund. Entities seeking endorsement as deductible gift recipients or operating such funds, authorities or institutions are affected, including government entities treated equivalently under section 30-180. Division 31 affects landowners entering conservation covenants with qualifying recipients. Division 32 affects taxpayers incurring entertainment expenses, including employers providing in-house dining facilities or seminar expenses, and company directors and partners under sections 32-80 to 32-90. Division 34 affects employees and certain withholding payment recipients under section 34-5 incurring expenditure on non-compulsory uniforms, and employers or entities paying such withholding payments applying for design registration. Division 35 affects individuals carrying on business activities alone or in partnership, including primary production and professional arts businesses where other assessable income is less than $40,000 under section 35-10(4). Division 36 affects tax entities with prior year losses, including non-corporate entities under section 36-15 and corporate tax entities under section 36-17. Provisions for related entities under section 26-35 affect relatives, partnerships involving relatives, directors or shareholders of private companies, beneficiaries of trusts, and connected entities. Provisions for foreign aspects, temporary residents and non-residents under section 11-55 affect foreign residents deriving income in the exclusive economic zone or on the continental shelf under section 768-110, temporary residents under sections 768-910 and 768-980, and entities receiving conduit foreign income under section 802-20. Payers and recipients of amounts subject to withholding under Schedule 1 to the Taxation Administration Act 1953 are affected where failure to withhold triggers non-deductibility under sections 26-25, 26-25A and 26-105.

Taxpayers must include in assessable income the specific items listed in section 10-5 and Division 15, such as the value of allowances, gratuities, compensation, benefits, bonuses and premiums under section 15-2, profit from profit-making undertakings or plans under section 15-15, royalties within ordinary meaning under section 15-20, amounts received as insurance or indemnity for loss of assessable income under section 15-30, amounts for providing mining, quarrying, prospecting or geothermal exploration information under section 15-40, work in progress amounts under section 15-50, and reimbursements under section 15-70. Taxpayers must include assessable recoupments under sections 20-35 or 20-40 using the method statements, reducing for balancing charges under section 20-45, and profits on disposal of leased cars under section 20-110 limited to the smaller of profit, total deductible lease payments or notional depreciation. Taxpayers have the right to deduct losses or outgoings under section 8-1 to the extent incurred in gaining or producing assessable income or necessarily incurred in carrying on a business, and specific amounts under the provisions listed in section 12-5 and Division 25, including expenditure for managing tax affairs under section 25-5, repairs to income-producing property under section 25-10, bad debts written off under section 25-35, loss of money by theft or misappropriation by an employee or agent under sections 25-45 and 25-47, payments for membership of trade or professional associations up to $42 under section 25-55, election expenses under sections 25-60 and 25-65, work in progress amounts paid under section 25-95, and transport expenses between workplaces under section 25-100. Taxpayers must not deduct amounts denied under Division 26, including penalties under section 26-5, leave payments except paid amounts or accrued leave transfer payments under section 26-10, political contributions under section 26-22, related entity payments beyond the reasonable amount under section 26-35, expenditure for maintaining a spouse or child under 16 under section 26-40, recreational club membership under section 26-45, leisure facilities under section 26-50, bribes under sections 26-52 and 26-53, amounts relating to indictable offences under section 26-54, superannuation contributions surcharge and excess non-concessional contributions tax under sections 26-60 and 26-75, and amounts relating to vacant land under section 26-102. Taxpayers must apply the method statements in sections 20-35 and 20-40 for assessable recoupments, reducing total deductions by any balancing charge under section 20-45. Taxpayers must treat GST elements as excluded under sections 17-15 and 27-20, include decreasing adjustments under section 17-10, and deny deduction for input tax credits under section 27-5. Individuals claiming car expenses must choose one method per car under section 28-20, use the cents per kilometre method with a reasonable estimate of business kilometres up to 5,000 or the log book method with a 12-week continuous period, odometer records and written estimate before lodging the return under sections 28-120 to 28-140, and retain log books and records for the retention period of five years after the latest income year of reliance under section 28-150. Taxpayers have the right to deduct gifts or contributions under section 30-15 where the recipient is described in the relevant table item in Subdivision 30-B and any special conditions are met, including receipt by the gift fund under section 30-130 where required. Entities have the right to endorsement as deductible gift recipients if they have an ABN, meet the description and conditions in the relevant table item, satisfy the winding-up or transfer rules in subsection 30-125(6), and comply with applicable trust fund guidelines. Deductible gift recipients must maintain a gift fund for the principal purpose, receiving only gifts, contributions for fund-raising events and related money, and using it only for that purpose under section 30-130. Deductible gift recipients must issue receipts stating the name of the fund, authority or institution, ABN if any, and that it is for a gift or specified contribution under section 30-228. An individual may elect in writing to spread a deduction for a section 30-15 gift or Division 31 conservation covenant over the current and up to four following income years under section 30-248. Landowners have the right to deduct the decrease in market value attributable to a perpetual conservation covenant under section 31-5 where no money, property or material benefit is received, the decrease exceeds $5,000 or the land was acquired within 12 months, and the covenant is with a qualifying recipient. Taxpayers have the right to deduct entertainment expenses under exceptions in the tables in sections 32-30 to 32-50, including fringe benefits under section 32-20 subject to reduction under section 63A of the Fringe Benefits Tax Assessment Act 1986, in-house dining facilities not at parties or social functions, seminars of at least four hours not being business meetings, and promotion or advertising to the public. Employers have the right to deduct non-compulsory uniform expenditure under section 34-10 if the design is registered under the Division at the time of expenditure, and must apply to the Industry Secretary for registration in the approved form under section 34-25 if seeking the deduction. Individuals carrying on business activities have the right to deduct excess deductions from non-commercial activities in the next year the activity is carried on under section 35-10(2) if the income requirement in section 35-10(2E) is met and one of the tests in sections 35-30 to 35-45 is satisfied or the Commissioner exercises discretion under section 35-55. Tax entities have the right to deduct tax losses of earlier years under section 36-15 in the order incurred, first against net exempt income and then against the excess of assessable income over other deductions, with corporate tax entities able to choose the amount under section 36-17 subject to limits on excess franking offsets. Payers must withhold and remit where required under Schedule 1 to the Taxation Administration Act 1953 or lose deductions under sections 26-25, 26-25A and 26-105, with restoration on later payment. Taxpayers must substantiate car expenses under the log book method in Division 28 and retain log books and odometer records for the retention period. Deductible gift recipients must meet endorsement requirements under Subdivision 30-BA and issue compliant receipts under Subdivision 30-CA.

Section 26-5 denies any deduction for an amount payable by way of penalty under an Australian or foreign law or ordered by a court on conviction for an offence, with subsection (1A) extending this to the general interest charge and shortfall interest charge, and subsection (2) carving out penalties under Subdivision 162-D of the GST Act. Section 26-54 denies deductions for losses or outgoings incurred in furtherance of or directly in relation to a physical element of an indictable offence against an Australian law of which the taxpayer has been convicted, with subsection (2) permitting amendment of the assessment at any time within four years after conviction notwithstanding section 170 of the Income Tax Assessment Act 1936. Deductions are denied for failure to withhold or comply with section 16-70 of the Taxation Administration Act 1953 under sections 26-25 and 26-25A, and for failure to withhold or comply with section 16-150 or 389-5 under section 26-105, with exceptions for nil amounts, good-faith ABN quotation and voluntary disclosure before examination. Section 26-35 limits deductions for payments to related entities to the amount the Commissioner considers reasonable, with the denied portion neither assessable income nor exempt income of the related entity under subsection (4). Section 26-47 quarantines excess deductions relating to using or holding boats by treating them as non-deductible in the current year and carrying forward as a quarantined amount deductible in the next income year, subject to reductions for boat capital gains, boat business profits, net exempt income and bankruptcy. Section 26-50 denies deductions for leisure facility expenses, with an anti-avoidance rule in subsection (7) disregarding use that would otherwise qualify for an exception if it arises under a scheme the Commissioner considers would not have been entered into but for the section. Section 26-52 denies deductions for bribes to foreign public officials, excluding benefits required or permitted by written law of the official's country or minor facilitation payments for routine government actions. Section 26-53 denies deductions for bribes to public officials where the benefit is not legitimately due. Section 26-102 limits deductions for vacant land holding expenses unless a substantial and permanent structure exists with independent purpose or the land is used in a covered business, with exceptions for corporate tax entities, non-self-managed superannuation plans, managed investment trusts, public unit trusts, and certain unit trusts or partnerships. Section 26-55 limits the total of deductions under section 25-50, Division 30, Division 31 and section 290-150 by subtracting from assessable income all deductions except tax losses and farm management deposit deductions. Enforcement occurs through the Commissioner's power to amend assessments and through the requirement that undeducted amounts to related entities are neither assessable nor exempt income of the recipient under section 26-35. The Commissioner may amend assessments to deny deductions for illegal activities under section 26-54(2) within four years after conviction. The Commissioner may treat a loss or outgoing under an arrangement as incurred in providing entertainment to the extent reasonable under section 32-75. The Industry Secretary must decide a uniform design registration application within 90 days or 90 days after further information and must give written notice of refusal with reasons and statements about review by the Administrative Review Tribunal under sections 34-30 and 34-33. The Australian Business Registrar must record the endorsement period and may change or remove an entry if it is not true under section 30-229. The Commissioner enforces these rules through assessments, with specific amendment powers and the ability to treat amounts as neither assessable nor exempt income under section 26-35(4) where deductions are denied for related entity payments.

The Act interacts with the Taxation Administration Act 1953 for collection, recovery, instalments under Schedule 1, refunds under Division 3A of Part IIB, and objection, review and appeal procedures under Part IVC. It interacts with the Income Tax Rates Act 1986 for applicable rates under section 4-25 and with the GST Act for effects on assessable income under Division 17, including disregard of GST payable on taxable supplies under section 17-5 and treatment of members of GST groups under section 17-20. Provisions from the Income Tax Assessment Act 1936 remain operative for items such as dividends under section 44, certain trust income under sections 98, 99 and 99A, and specific deductions or offsets listed in bold in sections 12-5, 13-1 and 11-15. The International Tax Agreements Act 1953 applies to treaty determinations under section 4-15. The A New Tax System (Goods and Services Tax Transition) Act 1999 provides for special credits included under section 17-30. The Fringe Benefits Tax Assessment Act 1986 interacts via section 15-70 for reimbursements and section 23L for non-cash benefits treated as non-assessable non-exempt income, and via section 63A for reduction of taxable value of fringe benefits in entertainment exceptions under section 32-20. The tables in sections 10-5, 11-55 and 12-5 incorporate provisions from the Income Tax Assessment Act 1936 shown in bold, including section 44(1) for dividends, section 51(1) for bad debts, section 63 for bad debts, section 109 for excessive payments to shareholders directors and associates, and sections 97, 98, 99 and 99A for trusts. Interactions with the Taxation Administration Act 1953 arise through withholding rules in Schedule 1 sections 12-35, 12-45, 12-60, 12-190 and 14-5, with non-compliance triggering denied deductions under sections 26-25, 26-25A and 26-105. The GST Act interacts through Division 17, which excludes GST payable on taxable supplies and increasing adjustments from assessable income under section 17-5 and includes decreasing adjustments under section 17-10, and through Division 27, which denies deductions to the extent of input tax credits or decreasing adjustments under section 27-5 and allows increasing adjustments under section 27-10. Other interactions include the Superannuation Guarantee (Administration) Act 1992 for the amnesty exception to denial of deductions for superannuation guarantee charge under section 26-95, the Higher Education Support Act 2003 and VET Student Loans Act 2016 for student debts under section 26-20, the Commonwealth Electoral Act 1918 for political contributions under section 26-22, and specific payment Acts such as the Boosting Cash Flow for Employers (Coronavirus Economic Response Package) Act 2020 under section 59-90 and the Coronavirus Economic Response Package (Payments and Benefits) Act 2020 under section 59-95. Section 30-25 interacts with the Higher Education Support Act 2003 for higher education providers in item 2.1.3 and residential educational institutions affiliated under statutory provisions. Section 30-30 interacts with the Student Assistance Act 1973 for technical and further education institutions in item 2.1.7 and the Marcus Oldham Farm Management College. Section 30-75 interacts with the Marriage Act 1961 for companies providing marriage education approved under section 9C. Section 30-45A interacts with the National Emergency Declaration Act 2020 for disasters that are the subject of a national emergency declaration. Subdivision 30-BA interacts with Division 426 of Schedule 1 to the Taxation Administration Act 1953 for applications for endorsement. Section 30-245 interacts with Part XI of the Commonwealth Electoral Act 1918 and corresponding State or Territory legislation for the definition of independent member. Division 34 interacts with section 90 of the Income Tax Assessment Act 1936 for partnerships. Section 35-10 interacts with sections 36-10 and 36-15 for exempt income. Endorsement applications are made under Division 426 of Schedule 1 to the Taxation Administration Act 1953. Receipts must state the ABN if any under section 30-228. Section 30-17 endorsement requirements apply to unlisted funds, authorities or institutions under section 31-10(2). Section 30-85 cross-refers to the OECD Development Assistance Committee list or Foreign Affairs Minister declarations. Section 30-86 interacts with notifiable instruments for disaster recognition. Division 31 interacts with Subdivision 30-B for qualifying recipients under section 31-10. Division 36 interacts with the Bankruptcy Act 1966 under Subdivision 36-B preventing deduction of pre-bankruptcy tax losses under section 36-35 and limiting deductions for debt payments under sections 36-40 and 36-45, and with section 170 of the Income Tax Assessment Act 1936 for amended assessments after choices under section 36-17.

The source notes list specific provisions addressing payments under the Coronavirus Economic Response Package (Payments and Benefits) Act 2020 as exempt income under section 53-25 and as non-assessable non-exempt income under sections 59-95, 59-96, 59-97 and 59-98. They also list 2019-20 bushfires payments under sections 59-55 and 59-60, 2021 floods and storms grants under section 59-99, and cost of living payments under section 52-10 as exempt or non-assessable non-exempt. The tables incorporate specific non-assessable non-exempt income items for coronavirus economic response payments under sections 59-90, 59-95, 59-96, 59-97 and 59-98, COVID-19 disaster payments under section 59-96, State and Territory grants under section 59-97, Commonwealth small business support payments under section 59-98, expenditure on COVID-19 tests under section 25-125, and various disaster relief grants including 2019-20 bushfires under sections 59-55 and 59-60, 2019 floods under sections 59-85 and 59-86, 2021 floods and storms under section 59-99 and Cyclone Seroja under section 59-105. The tables also include items for electricity generation shortfall charge refunds under section 59-100 and water infrastructure improvement payments under section 59-65. Specific recipients in the tables in Subdivision 30-B have conditions that the gift must be made after or on or after dates ranging from 1998 to 2024, or before dates up to 2029, including Australian Business Week Limited (after 8 December 2003), Ethnic Business Awards Foundation Limited (after 30 June 2024 and before 1 July 2029), Cambridge Australia Scholarships Limited (on or after 1 July 2021 and before 1 July 2026), and numerous entities under section 30-105 such as Australian Democracy Network Ltd (after 30 June 2024 and before 1 July 2029). Time-limited deductions for developed country disaster relief funds are limited to two years from the day specified in the recognition under section 30-86(4). Deductions for gifts to public funds for Australian disaster relief under item 4.1.5 are limited to the two years beginning on the day specified in a declaration under section 30-45A or section 30-46.

No cases are named in the source notes.

An amount of ordinary or statutory income has only one status in the hands of a particular entity under section 6-1, and provisions outside Part 1-3 prevail over ordinary income rules under section 6-25 unless the contrary intention appears. If multiple provisions allow deduction of the same amount, deduction is available only under the most appropriate provision under section 8-10. For car expenses, the cents per kilometre method applies only to the first 5,000 business kilometres under section 28-25, and the log book method requires substantiation under Subdivision 900-C with retention for five years plus any dispute period under section 28-150. Profit inclusion under Subdivision 20-B is limited to the smallest of total deductible lease payments, notional depreciation, or excess consideration, with reductions for earlier disposals under section 20-140 and no inclusion on inheritance under section 20-145. Recoupment amounts are excluded to the extent they are ordinary or statutory income outside Subdivision 20-A under section 20-20. Exceptions apply to particular cars taken on hire under section 28-165 and to small business entities pooling cars under section 20-157. Deductions for payments or liabilities to related entities are limited to the amount the Commissioner considers reasonable under section 26-35(1), with the denied portion neither assessable income nor exempt income of the related entity under section 26-35(4). Excess deductions relating to using or holding boats are quarantined under section 26-47(2) and deductible only in the next income year, subject to reductions for boat capital gains, boat business profits, net exempt income and bankruptcy. Deductions for losses or outgoings to acquire, retain or use a leisure facility are denied under section 26-50(1), with exceptions only where the facility is held for sale in the ordinary course of business or used mainly to provide it for payment in the ordinary course of business. Travel-related deductions for residential premises used as residential accommodation are denied under section 26-31(1) unless necessarily incurred in carrying on a business, with exceptions for corporate tax entities, managed investment trusts and certain unit trusts and partnerships under subsection (2). Recoupment inclusions cannot exceed the original loss or outgoing and are reduced by prior inclusions and balancing charges under sections 20-35, 20-40 and 20-45. Division 26 denials apply even if expenditure would otherwise satisfy section 8-1, with specific exceptions for fringe benefits and arm's length arrangements. Car expense deductions are limited to business kilometres and one method per car per year; log book method requires records. Travel deductions under section 25-100 require direct travel and actual performance of activities at the second workplace. Lease termination deductions under section 25-110 are spread over five years and denied for finance leases, non-arm's length amounts or replacement arrangements. Vacant land holding costs under section 26-102 are quarantined unless substantial permanent structure or business use exceptions apply. GST adjustments must be applied to cost and termination values, with apportionment for mixed use under section 27-110. Forestry and work in progress amounts are included only in the year the payer can claim the deduction. Collecting society payments are assessable except to the extent previously assessed to directors under ITAA 1936 sections 98, 99 or 99A. Non-deductibility for related entity payments is limited to the Commissioner's reasonable amount, with the denied portion neither assessable nor exempt to the recipient under section 26-35. Deductions for vacant land are limited under section 26-102(1) unless the land is used or available for use in carrying on a business covered by subsection (2) or a substantial permanent structure exists, with specific disregarding rules for residential premises, primary producers and arm's length leases. Related entity deductions are limited to the reasonable amount under section 26-35(1), with the denied portion neither assessable nor exempt income of the related entity under subsection (4). Leisure facility deductions are denied under section 26-50(1) except where held for sale in the ordinary course of business or used mainly to produce rent-like income, with an anti-avoidance rule in subsection (7). Car expense deductions require a single method per car per year under section 28-20 and substantiation for the log book method, with exceptions for taxis and short-term hire cars under section 28-165. Recoupment inclusion under sections 20-35 and 20-40 is capped at the amount of the loss or outgoing and adjusted for balancing charges under section 20-45. Non-deductible penalties include the general interest charge under section 26-5(1A). Limits apply to total deductions for gifts, conservation covenants and personal superannuation contributions under section 26-55(1).

Taxpayers must include in assessable income the specific items listed in section 10-5 and Division 15. Taxpayers must include assessable recoupments under sections 20-35 or 20-40 using the method statements. Taxpayers must not deduct amounts denied under Division 26. Individuals claiming car expenses must choose one method per car under section 28-20, use the cents per kilometre method with a reasonable estimate of business kilometres up to 5,000 or the log book method with a 12-week continuous period, odometer records and written estimate before lodging the return under sections 28-120 to 28-140, and retain log books and records for the retention period of five years after the latest income year of reliance under section 28-150. Taxpayers must apply the method statements in sections 20-35 and 20-40 for assessable recoupments. Taxpayers must treat GST elements as excluded under sections 17-15 and 27-20. Deductible gift recipients must maintain a gift fund for the principal purpose, receiving only gifts, contributions for fund-raising events and related money, and using it only for that purpose under section 30-130. Deductible gift recipients must issue receipts stating the name of the fund, authority or institution, ABN if any, and that it is for a gift or specified contribution under section 30-228. Landowners must ensure conservation covenants are perpetual, restrict activities degrading environmental value, be registered on title where possible, and be approved by or under a program approved by the Environment Minister. Employers must apply to the Industry Secretary for registration in the approved form under section 34-25 if seeking the deduction for non-compulsory uniforms. Payers must withhold and remit where required under Schedule 1 to the Taxation Administration Act 1953 or lose deductions under sections 26-25, 26-25A and 26-105. Taxpayers must substantiate car expenses under the log book method in Division 28 and retain log books and odometer records for the retention period. Deductible gift recipients must meet endorsement requirements under Subdivision 30-BA and issue compliant receipts under Subdivision 30-CA.