Div 316of the Income Tax Assessment Act 1997 applies in relation to demutualisations occurring on or after 1 July 2008.

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Division 316 of the Income Tax Assessment Act 1997 applies in relation to demutualisations occurring on or after 1 July 2008. If: (a) any assets held by the benefit funds of a life insurance company that is a friendly society for the purpose of providing superannuation benefits to its members are transferred before 1 July 2001 to a complying superannuation fund; and (b) the persons who had interests in those assets immediately before the transfer had substantially the same interests in the assets after the transfer; the transfer is disregarded for any purposes of the Income Tax Assessment Act 1997 or the Income Tax Assessment Act 1936. (1) In working out the amount that a life insurance company can deduct, in respect of life insurance policies that are disability policies (other than continuous disability policies) under subsection 320‑85(1) of the Income Tax Assessment Act 1997 for the income year in which 1 July 2000 occurs, the value of the company’s liabilities under the net risk components of the policies at the end of the previous income year is taken to be the value of the liabilities as at the end of 30 June 2000 relating to those policies that was used by the company for the purposes of its return of income. (2) In working out the amount that a life insurance company can deduct, in respect of life insurance policies (other than policies to which subsection (1) applies) under subsection 320‑85(1) of the Income Tax Assessment Act 1997 for the income year in which 1 July 2000 occurs, the value of the company’s liabilities under the net risk components of the policies at the end of the previous income year is taken to be the value of the company’s liabilities as at the end of 30 June 2000 under the net risk components relating to those policies as calculated under subsection 320‑85(4) of that Act. If: (2) If the life insurance company wishes to include a part of an approved asset in its virtual PST before 1 October 2000, the company must, before that date, certify in writing the part (if any) of the asset to be included in the virtual PST. (3) If the life insurance company so certifies, the part of the asset stated in the certificate is to be treated as a separate asset of the company. (d) if the transfer occurs before 1 October 2000—the transfer is to be disregarded for the purposes of the Income Tax Assessment Act 1997; or (e) if the transfer occurs on or after 1 October 2000—the transfer is to be disregarded for the purposes of that Act, except: > Note: This means, amongst other things, that a life insurance company to which this subsection applies will not be able to claim a deduction in respect of the transfer under subsection 320‑87(2) of that Act. (1A) If subsection (1) has applied to a life insurance company in respect of a transfer of assets to meet a liability or a part of a liability, that subsection does not apply again in respect of another transfer of assets to meet that liability or that part of the liability. (2) If a life insurance company that is a friendly society establishes a virtual PST in the 2000‑01 income year, the calculation of the transfer values of the company’s virtual PST assets as at the end of that income year is to be made not later than 90 days after the end of that income year. (1) Subsection (3) applies for the purposes of subparagraph (b)(i) of the definition of virtual PST life insurance policy in subsection 995‑1(1) of the Income Tax Assessment Act 1997, as in force just after the commencement of item 259 of Schedule 1 to the Superannuation Legislation Amendment (Simplification) Act 2007. (2) Subsection (3) also applies for the purposes of subparagraph (b)(i) of the definition of complying superannuation/FHSA life insurance policy in subsection 995‑1(1) of the Income Tax Assessment Act 1997, as in force just after the commencement of item 47 of Schedule 7 to the First Home Saver Accounts (Consequential Amendments) Act 2008. (3) Treat an annuity as having been purchased out of a superannuation lump sum or an employment termination payment, if the annuity was purchased: (b) out of an eligible termination payment (within the meaning of the Income Tax Assessment Act 1997, as in force just before the commencement mentioned in subsection (1) of this section). (2) If the life insurance company wishes to include a part of an approved asset in its segregated exempt assets before 1 October 2000, the company must, before that date, certify in writing the part (if any) of the asset to be included in the segregated exempt assets. (3) If the life insurance company so certifies, the part of the asset stated in the certificate is to be treated as a separate asset of the company. (a) a life insurance company had a liability before 1 July 2000 under a life insurance policy where the income of the company attributable to the liability was exempt from tax before that date; and (c) there is a transfer of the company’s assets to the segregated exempt assets to meet that liability or that part of the liability; (d) if the transfer occurs before 1 October 2000—the transfer is to be disregarded for the purposes of the Income Tax Assessment Act 1997; or (e) if the transfer occurs on or after 1 October 2000—the transfer is to be disregarded for the purposes of that Act, except: > Note: This means, amongst other things, that a life insurance company to which this subsection applies will not be able to claim a deduction in respect of the transfer under subsection 320‑105(1) of that Act. (1A) If subsection (1) has applied to a life insurance company in respect of a transfer of assets to meet a liability or a part of a liability, that subsection does not apply again in respect of another transfer of assets to meet that liability or that part of the liability. (2) If a life insurance company that is a friendly society segregates any of its assets in accordance with section 320‑225 of the Income Tax Assessment Act 1997 in the 2000‑01 income year, the calculation of the transfer values of the company’s segregated exempt assets as at the end of that income year is to be made not later than 90 days after the end of that income year. Section 322‑25 of the Income Tax Assessment Act 1997 applies to amounts paid or applied before, on or after the commencement of that section to meet entitlements arising under Part VC of the Insurance Act 1973 after 17 October 2008. 328‑110 Working out whether you are a small business entity for the 2007‑08 or 2008‑09 income year—turnover for earlier income years 328‑112 Working out whether you are a small business entity for certain small business concessions—entities connected with you > new Subdivision 328‑D means Subdivision 328‑D of the Income Tax Assessment Act 1997, as in force after the commencement of this section. > old Subdivision 328‑D means Subdivision 328‑D of the Income Tax Assessment Act 1997, as in force immediately before the commencement of this section. > STS taxpayer means an STS taxpayer within the meaning of Division 328 of the Income Tax Assessment Act 1997, as in force immediately before the commencement of this section. #### 328‑110 Working out whether you are a small business entity for the 2007‑08 or 2008‑09 income year—turnover for earlier income years (1) This section applies for the purpose of working out whether you are a small business entity (other than because of subsection 328‑110(4) of the Income Tax Assessment Act 1997) for the 2007‑08 or 2008‑09 income year. (2) You work out your aggregated turnover for the 2005‑06 or 2006‑07 income year as if the amendments made by Schedule 1 to the Tax Laws Amendment (Small Business) Act 2007 had been in force in relation to that year. (a) your aggregated turnover for the 2005‑06 income year (worked out in accordance with subsection (2)) is $2 million or more; but (b) your STS group turnover for that year (worked out under Subdivision 328‑F of the Income Tax Assessment Act 1997, as in force immediately before the commencement of this section) is less than $2 million. (2) The following provisions apply as if you are a small business entity for the income year in which you are winding up the business: #### 328‑112 Working out whether you are a small business entity for certain small business concessions—entities connected with you (1) For the purpose of working out whether you are a small business entity for the 2007‑08, 2008‑09, 2009‑10 or 2010‑11 income year (each a relevant income year) for the purposes of a provision to which subsection (3) applies: (2) An entity (the first entity) controls a discretionary trust for a relevant income year if, for any of the 4 income years (a previous income year) before that year: (a) if the previous income year is before the 2007‑08 income year—the trustee of the trust made a distribution of $100,000 or more to the first entity, any of its affiliates, or the first entity and any of its affiliates; or (i) the trustee of the trust paid to, or applied for the benefit of, the first entity, any of the first entity’s affiliates, or the first entity and any of its affiliates, any of the income or capital of the trust; and (ii) the percentage (the control percentage) of the income or capital paid or applied is at least 40% of the total amount of income or capital paid or applied by the trustee for that year. (1) This section sets out what happens to your ordinary income and general deductions, and deductions under section 25‑5 or 25‑10 of the Income Tax Assessment Act 1997, if: (2) This section also sets out what happens to your ordinary income and general deductions, and deductions under section 25‑5 or 25‑10 of the Income Tax Assessment Act 1997, if: (3) Any ordinary income that, apart from paragraph 328‑105(1)(a) of the Income Tax Assessment Act 1997 (as in force immediately before its repeal by Schedule 2 to the Tax Laws Amendment (2004 Measures No. 7) Act 2005), you would have derived before the changeover year (while you were using the STS accounting method) and you have not included in your assessable income because you have not received it is included in your assessable income for the changeover year. (4) Any general deductions, and deductions under section 25‑5 or 25‑10 of the Income Tax Assessment Act 1997, that, apart from paragraph 328‑105(1)(b) of that Act (as in force immediately before its repeal by Schedule 2 to the Tax Laws Amendment (2004 Measures No. 7) Act 2005), you would have incurred before the changeover year (while you were using the STS accounting method) and that you have not deducted because you have not paid them can be deducted for the changeover year. (b) for any later income year for which you are a small business entity but only if you used the STS accounting method for the income year before that later year. > Note: Example: You are a small business entity for the 2007‑08 and 2008‑09 income years and you continue to use the STS accounting method for those years. You are not a small business entity for the 2009‑10 income year so you cannot continue to use the STS accounting method for that year. Because you cannot use the STS accounting method for the 2009‑10 income year, you will not be able to use it again for a later income year even if you are a small business entity for that later year. In sections 328‑115 and 328‑120, STS accounting method means the accounting method that was required by the Income Tax Assessment Act 1997 to be used by STS taxpayers for the 2004‑05 income year. (b) you made a choice under subsection 328‑175(3) of old Subdivision 328‑D in relation to a depreciating asset you use to carry on a primary production business and for which you could deduct amounts under Subdivision 40‑F or 40‑G of the Income Tax Assessment Act 1997. (2) In determining whether you can choose to use Subdivision 328‑D of the Income Tax Assessment Act 1997 in an increased access year, disregard subsection 328‑175(10) of that Act. (3) In applying paragraph 328‑175(10)(b) of that Act for the purpose of determining whether you can choose to use that Subdivision in any income year after the increased access years, disregard: (4) Paragraph 328‑180(1)(b) of the Income Tax Assessment Act 1997 applies to a depreciating asset as if a reference in that paragraph to $1,000: (i) first used the asset, for a taxable purpose, at or after the 2015 budget time and before the 2019 application time; or (ii) first installed the asset ready for use, for a taxable purpose, at or after the 2015 budget time and before the 2019 application time; or (i) first used the asset, for a taxable purpose, at or after the 2019 application time and before the 2019 budget time; or (ii) first installed the asset ready for use, for a taxable purpose, at or after the 2019 application time and before the 2019 budget time; or (i) first used the asset, for a taxable purpose, at or after the 2019 budget time and before the 2020 announcement time; or (ii) first installed the asset ready for use, for a taxable purpose, at or after the 2019 budget time and before the 2020 announcement time; or (ii) first installed the asset ready for use, for a taxable purpose, on or after 1 July 2023 and on or before 30 June 2026. (a) a reference in that paragraph to the end of the income year in which you start to use the asset, or have it installed ready for use, for a taxable purpose were a reference to the earlier of: if: (i) first used the asset, for a taxable purpose, at or after the 2020 announcement time and on or before 30 June 2021; or (ii) first installed the asset ready for use, for a taxable purpose, at or after the 2020 announcement time and on or before 30 June 2021. (5) Paragraph 328‑180(2)(a) or (3)(a) of the Income Tax Assessment Act 1997 applies to an amount included in the second element of the cost of an asset as if a reference in that paragraph to $1,000: (5A) For the purposes of determining whether, under subsection 328‑180(2) of the Income Tax Assessment Act 1997, you can deduct, for an income year (the current year), the taxable purpose proportion of an amount included in the second element of the cost of an asset, disregard paragraph (b) of that subsection if: (2) For the purposes of determining whether subsection 328‑180(1) of the Income Tax Assessment Act 1997 allows you to deduct an amount in relation to a depreciating asset, disregard paragraph (b) of that subsection (which sets a limit of $1,000 on the cost of the asset) if, in the period beginning at the 2020 budget time and ending on 30 June 2023, you: (3) For the purposes of determining whether subsection 328‑180(2) of the Income Tax Assessment Act 1997 allows you to deduct an amount in relation to a depreciating asset, disregard paragraph (a) of that subsection (which sets a limit of $1,000 on the amount) if the amount is included in the second element of the cost of the asset at any time in the period beginning at the 2020 budget time and ending on 30 June 2023. (4) In applying paragraph 328‑180(3)(a) of the Income Tax Assessment Act 1997 to an asset, disregard an amount included in the second element of the cost of the asset if the amount is deducted under subsection 328‑180(2) of that Act, as modified by subsection (3) of this section. (5) Section 328‑210 of the Income Tax Assessment Act 1997 applies as if the words “less than $1,000 but” in subsection (1) were disregarded, in relation to a deduction for an income year that ends: Subsection 328‑190(2) of the Income Tax Assessment Act 1997 applies to a depreciating asset as if a reference in that subsection to 15% were a reference to 57.5% if you are covered by section 40‑125 for the asset (which is about backing business investment). (1) A depreciating asset of yours that had been allocated to your general STS pool is treated as being allocated to your general small business pool. (2) A depreciating asset of yours that had been allocated to your long life STS pool is treated as being allocated to your long life small business pool. (3) If you made a choice, under subsection 328‑185(5) of old Subdivision 328‑D, not to have a depreciating asset allocated to your long life STS pool, the choice has effect for the purposes of subsection 328‑185(5) of new Subdivision 328‑D. (1) This section applies if a depreciating asset of yours is treated as being allocated to your general small business pool or long life small business pool under section 328‑185. (2) The opening pool balance of your general small business pool or long life small business pool for the 2007‑08 income year is taken to be the closing pool balance of your general STS pool or long life STS pool, as the case requires, for the 2006‑07 income year, reduced or increased by any adjustment required under section 328‑225 of new Subdivision 328‑D (about change in the business use of an asset). (a) you were not an STS taxpayer for the 2006‑07 income year (because you stopped being an STS taxpayer before that time); but (b) you are a small business entity for the 2007‑08 income year or a later income year and you choose to use new Subdivision 328‑D to deduct amounts for your depreciating assets for that income year; the opening pool balance of your general small business pool or long life small business pool includes the sum of the taxable purpose proportions of the adjustable values of depreciating assets allocated to the pool under subsection 328‑185(3) of new Subdivision 328‑D for that year. (1) This section applies for the purposes of applying Subdivision 328‑D of the Income Tax Assessment Act 1997 for the 2012‑13 income year and later income years. (2) A depreciating asset that had been allocated to your long life small business pool is treated as being allocated to your general small business pool. (a) the closing pool balance of your general small business pool for the 2011‑12 income year, reduced or increased by any adjustment required under section 328‑225 of that Act; and (b) the closing pool balance of your long life small business pool for the 2011‑12 income year, reduced or increased by any adjustment required under that section. (1) This section applies if you chose to stop being an STS taxpayer for the 2005‑06 income year or the 2006‑07 income year. (2) You cannot choose to use new Subdivision 328‑D to deduct amounts for your depreciating assets until at least 5 years after the income year for which you chose to stop being an STS taxpayer. > Note: Subdivision 328‑D of the Income Tax Assessment Act 1997 continues to apply to depreciating assets that have been allocated to your small business pools even if you are not a small business entity, or do not choose to use that Subdivision, for an income year: see section 328‑220 of that Subdivision. (a) you are a small business entity, or an entity covered by subsection (4), for the income year in which you incur the expenditure; and (c) you can deduct 100% of the expenditure under another provision of a taxation law (whether or not in, or wholly in, the income year in which the expenditure is incurred); and (2) Subsection (1) does not apply if your 2022‑23 income year starts before 1 July 2022. Instead, you can deduct 20% of particular expenditure for your 2023‑24 income year if: (a) you are a small business entity, or an entity covered by subsection (4), for the income year in which you incur the expenditure; and (c) you can deduct 100% of the expenditure under another provision of a taxation law (whether or not in, or wholly in, the income year in which the expenditure is incurred); and (d) you can deduct 100% of the expenditure under another provision of a taxation law (whether or not in, or wholly in, the income year in which the expenditure is incurred); and (i) each reference in Subdivision 328‑C (about what is a small business entity) of the Income Tax Assessment Act 1997 to $10 million were instead a reference to $50 million; and (ii) the reference in paragraph 328‑110(5)(b) of that Act to a small business entity were instead a reference to an entity covered by this subsection. (5) The Income Tax Assessment Act 1997 has effect as if this section and section 328‑450 of this Act were provisions of Division 25 of the Income Tax Assessment Act 1997. (6) Sections 8‑10 and 355‑715 of the Income Tax Assessment Act 1997 do not apply in relation to a deduction under this section. (ii) if the provider is a registered body of a kind listed in paragraph (2)(b), (c) or (d)—the training is within the provider’s scope of registration for that kind of registered body; and (d) each enrolment, or arrangement, for the provision of the training is made or entered into at or after 7.30 pm, by legal time in the Australian Capital Territory, on 29 March 2022; and > Note: Paragraphs (b) and (c) mean this section will not apply to expenditure for on‑the‑job training or training provided by you in house. (a) a registered higher education provider (within the meaning of the Tertiary Education Quality and Standards Agency Act 2011); (b) a NVR registered training organisation (within the meaning of the National Vocational Education and Training Regulator Act 2011); (c) a registered education and training organisation (within the meaning of the Education and Training Reform Act 2006 (Vic.)); (a) the lower of $20,000 and 20% of the total amount (which may be nil) of your expenditure to which subsection 328‑460(1) applies; and (b) the lower of $20,000 and 20% of the total amount (which may be nil) of your expenditure to which subsection 328‑460(2) applies. (2) Subsection (1) does not apply if your 2022‑23 income year starts before 1 July 2022. Instead, you can deduct for your 2023‑24 income year an amount that is equal to the sum of: (a) the lower of $20,000 and 20% of the total amount (which may be nil) of your expenditure to which subsection 328‑460(1) applies; and (b) the lower of $20,000 and 20% of the total amount (which may be nil) of your expenditure to which subsection 328‑460(2) applies. (3) The Income Tax Assessment Act 1997 has effect as if this section and section 328‑460 of this Act were provisions of Division 25 of the Income Tax Assessment Act 1997. (4) Sections 8‑10 and 355‑715 of the Income Tax Assessment Act 1997 do not apply in relation to a deduction under this section. (a) you are a small business entity, or an entity covered by subsection (3), for the income year in which you incur the expenditure; and (b) you incur the expenditure in the period starting at 7.30 pm, by legal time in the Australian Capital Territory, on 29 March 2022 and ending at the end of: (c) you can deduct the amount of the expenditure under a provision of a taxation law (other than section 328‑455 of this Act) whether or not in, or wholly in, the income year in which the expenditure was incurred; and (d) you incur the expenditure wholly or substantially for the purposes of your digital operations or digitising your operations; and (f) if the expenditure is on a depreciating asset—the only balancing adjustment events that occur for the asset at a time during the period referred to in paragraph (b) when you hold the asset occur because you stop holding the asset because of an event or circumstance referred to in subsection 40‑365(2) (about involuntary disposals) of the Income Tax Assessment Act 1997; and (ii) the asset is not in‑house software allocated to a software development pool for the income year in which you incur the expenditure; (a) you are a small business entity, or an entity covered by subsection (3), for the income year in which you incur the expenditure; and (c) you can deduct the amount of the expenditure under a provision of a taxation law (other than section 328‑455 of this Act) whether or not in, or wholly in, the income year in which the expenditure was incurred; and (d) you incur the expenditure wholly or substantially for the purposes of your digital operations or digitising your operations; and (f) if the expenditure is on a depreciating asset—the only balancing adjustment events that occur for the asset at a time during the period referred to in paragraph (b) when you hold the asset occur because you stop holding the asset because of an event or circumstance referred to in subsection 40‑365(2) (about involuntary disposals) of the Income Tax Assessment Act 1997; and (ii) the asset is not in‑house software allocated to a software development pool for the income year in which you incur the expenditure; (i) each reference in Subdivision 328‑C of the Income Tax Assessment Act 1997 (about what is a small business entity) to $10 million were instead a reference to $50 million; and (ii) the reference in paragraph 328‑110(5)(b) of that Act to a small business entity were instead a reference to an entity covered by this subsection. (4) For the purposes of paragraphs (1)(c) and (2)(c), in working out whether you can deduct an amount of expenditure on a depreciating asset, assume that: (b) throughout that effective life, you will use the asset for a taxable purpose to the same extent as you use it, or have it installed ready for use, for a taxable purpose in the income year in which you start to use it, or have it installed ready for use, for a taxable purpose. (a) 20% of the total amount (which may be nil) of your expenditure to which subsection 328‑470(1) or (3) applies in relation to the income year; and > Note: The deduction relates to the period of 1 July 2023 to 30 June 2024. An entity may have deducted an amount under paragraph (a) for a previous income year if the entity has a substituted accounting period. (2) The Income Tax Assessment Act 1997 has effect as if this section and section 328‑470 of this Act were provisions of Division 25 of the Income Tax Assessment Act 1997. (3) Sections 8‑10, 40‑215 and 355‑715 of the Income Tax Assessment Act 1997 do not apply in relation to a deduction under this section. (b) you can deduct the expenditure under a provision of a taxation law (other than section 328‑465 of this Act) whether or not in, or wholly in, the income year in which the expenditure is incurred; and (c) you start to use the asset, or have it installed ready for use, for any purpose after 30 June 2023 but before 1 July 2024; and (d) you start to use the asset, or have it installed ready for use, for a taxable purpose at a time (the start time) that is: (e) you are a small business entity, or an entity covered by subsection (4), for the income year that includes the start time; and (h) the only balancing adjustment events that occur for the asset at a time during the period starting on 1 July 2023 and ending on 30 June 2024 occur because you stop holding the asset because of an event or circumstance referred to in subsection 40‑365(2) (about involuntary disposals) of the Income Tax Assessment Act 1997. (i) a new reasonably comparable depreciating asset that uses a fossil fuel (other than a use of which that is merely incidental) is available in the market at the start time; (ii) if the asset is being acquired by way of replacement of or substitution for another depreciating asset—the asset is more energy efficient than the other asset; (iii) if the asset is not being acquired by way of replacement of or substitution for another depreciating asset—the asset is more energy efficient than a new reasonably comparable depreciating asset that is available in the market at the start time; or (i) a depreciating asset (other than an asset excluded under subsection (6)) that uses electricity, or energy that is generated from a renewable source, to be more energy efficient; (iv) the use of electricity, or energy that is generated from a renewable source, by another depreciating asset to be monitored. (a) the amount is included in the second element of a depreciating asset’s cost under paragraph 40‑190(2)(a) of the Income Tax Assessment Act 1997; and (b) you can deduct the expenditure under a provision of a taxation law (other than section 328‑465 of this Act) whether or not in, or wholly in, the income year in which the expenditure is incurred; and (d) you are a small business entity, or an entity covered by subsection (4), for the income year in which the expenditure is incurred; and (i) if the asset could use a fossil fuel (other than a use of which that is merely incidental)—the asset to only use electricity, or energy that is generated from a renewable source; (ii) if the asset uses electricity, or energy that is generated from a renewable source—the asset to be more energy efficient; (g) the only balancing adjustment events that occur for the asset at a time during the period starting on 1 July 2023 and ending on 30 June 2024 occur because you stop holding the asset because of an event or circumstance referred to in subsection 40‑365(2) (about involuntary disposals) of the Income Tax Assessment Act 1997. (i) each reference in Subdivision 328‑C of the Income Tax Assessment Act 1997 (about what is a small business entity) to $10 million were instead a reference to $50 million; and (ii) the reference in paragraph 328‑110(5)(b) of that Act to a small business entity were instead a reference to an entity covered by this subsection. (5) For the purposes of paragraph (1)(b) or (3)(b), in working out whether you can deduct an amount of expenditure assume that: (i) for the purposes of paragraph (1)(b)—to the same extent as you use it, or have it installed ready for use, for a taxable purpose in the income year in which you start to use it, or have it installed ready for use, for a taxable purpose; or (ii) for the purposes of paragraph (3)(b)—to the same extent as you use it for a taxable purpose in the income year in which the expenditure is incurred. (b) expenditure (other than expenditure referred to in subparagraph (3)(e)(i)) on an asset that can use a fossil fuel (other than a use of which that is merely incidental); (c) an asset that solely or predominantly generates electricity from a renewable source (for example, photovoltaic cells) or expenditure on such an asset; (d) an asset, or expenditure, being capital works for which you can deduct an amount under Division 43 of the Income Tax Assessment Act 1997; > Note: Subsections (1) and (3) also do not apply to an item of trading stock because such an asset is not a depreciating asset: see section 40‑30 of the Income Tax Assessment Act 1997. A reference in each of the following provisions of the Income Tax Assessment Act 1997 to a registration under section 27A of the Industry Research and Development Act 1986 includes a reference to a registration under former section 39J of that Act: (a) a balancing adjustment event happens in an income year (the event year) commencing on or after 1 July 2011 for an asset held by the R&D entity; and (b) the R&D entity cannot deduct an amount under section 40‑25 of the Income Tax Assessment Act 1997 (the new Act), as that section applies apart from: (i) the R&D entity can deduct (the old law deductions) under former section 73BA or 73BH of the old Act an amount for one or more income years for the asset; (ii) the R&D entity chooses tax offsets under former section 73I of the old Act instead of deductions (also the old law deductions) under those former sections for one or more income years for the asset; and (d) the R&D entity is registered under section 27A of the Industry Research and Development Act 1986 for one or more R&D activities for the event year; and (i) the R&D entity could deduct for the event year an amount under subsection 40‑285(2) of that Act for the asset and the balancing adjustment event; or (ii) an amount would be included in the R&D entity’s assessable income for the event year under subsection 40‑285(1) of that Act for the asset and the balancing adjustment event. > Note 1: This section applies even if the R&D entity is entitled under section 355‑100 of the new Act to tax offsets for one or more income years for deductions under section 355‑305 of that Act for the asset. (2) For the purposes of paragraph (1)(e), assume that Division 40 of the new Act applied with the changes described in section 355‑310 of that Act, but with these changes to that section: <table cellspacing="0" cellpadding="0" style="width:365.25pt; border-collapse:collapse"><thead><tr><td colspan="3" style="width:354.45pt; border-top:1.5pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top">Changes to be made to section 355‑310 of the new Act</td></tr><tr><td style="width:22pt; border-top:0.75pt solid #000000; border-bottom:1.5pt solid #000000; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top">Item</td><td style="width:92.1pt; border-top:0.75pt solid #000000; border-bottom:1.5pt solid #000000; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top">For a reference in section 355‑310 to...</td><td style="width:218.75pt; border-top:0.75pt solid #000000; border-bottom:1.5pt solid #000000; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top">substitute a reference to...</td></tr></thead><tbody><tr><td style="width:22pt; border-top:1.5pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top">1</td><td style="width:92.1pt; border-top:1.5pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top">section 355‑315</td><td style="width:218.75pt; border-top:1.5pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top">this section</td></tr><tr><td style="width:22pt; border-top:0.75pt solid #000000; border-bottom:1.5pt solid #000000; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top">2</td><td style="width:92.1pt; border-top:0.75pt solid #000000; border-bottom:1.5pt solid #000000; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top">the purpose of conducting one or more of the R&D activities to which the R&D deductions (within the meaning of that section) relate</td><td style="width:218.75pt; border-top:0.75pt solid #000000; border-bottom:1.5pt solid #000000; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top">both:(a) the purpose of conducting one or more of the research and development activities (within the meaning of former section 73B of the old Act) to which the old law deductions relate; and(b) the purpose of conducting one or more of the R&D activities to which the new law deductions (if any) relate</td></tr></tbody></table> ``` if Division 40 of that Act applied as described in subsection (2) of this section, the R&D entity is taken to be able to deduct under subsection 355‑315(2) of the new Act that amount for the event year. (4) If an amount (the section 40‑285 amount) would be included in the R&D entity’s assessable income for the event year under subsection 40‑285(1) of the new Act for the asset and the event if Division 40 of that Act applied as described in subsection (2) of this section, the sum of: is taken to be included in the R&D entity’s assessable income for the event year under subsection 355‑315(3) of the new Act: ![Start formula Adjusted section 40-285 amount times open bracket start fraction Old law 1.25 rate deductions over Total decline in value end fraction close bracket times start fraction 1 over 4 end fraction end formula](image.028.png) > adjusted section 40‑285 amount means so much of the section 40‑285 amount as does not exceed the total decline in value. > old law 1.25 rate deductions means the sum of the R&D entity’s notional Division 40 deductions, and notional Division 42 deductions, (if any) for the asset that were multiplied by 1.25 in working out the old law deductions. > total decline in value means the asset’s cost, less its adjustable value, worked out under Division 40 of the new Act as it applies as described in subsection (2). (4A) In applying Division 355 of the new Act in relation to the asset for the income year, if the R&D entity is entitled under section 355‑100 of the new Act to tax offsets for one or more income years for deductions (the new law deductions) under section 355‑305 for the asset, the R&D entity is taken to have: (a) if an amount is taken to be included in the R&D entity’s assessable income for the event year as mentioned in subsection (4) of this section—a clawback amount under section 355‑446 of the new Act for the income year equal to the amount mentioned in subsection (4B) of this section; or (b) if the R&D entity is taken to be able to deduct an amount as mentioned in subsection (3) of this section—a catch up amount under section 355‑465 of the new Act for the income year equal to the amount of that deduction. ![Start formula Adjusted section 40-285 amount times start fraction Sum of new law deductions over Total decline in value end fraction end formula](image.029.png) > adjusted section 40‑285 amount means so much of the section 40‑285 amount as does not exceed the total decline in value. > total decline in value means the asset’s cost, less its adjustable value, worked out under Division 40 of the new Act as it applies as described in subsection (2) of this section. (b) former section 73BF of the old Act (as that section applies because of Part 2 of Schedule 4 to the Tax Laws Amendment (Research and Development) Act 2011); to the extent that they would otherwise apply apart from this section to the R&D entity for the event, do so apply to the R&D entity for the event. > Note 1: Section 355‑315 of the new Act would otherwise apply for the event in a case where the R&D entity had new law deductions. (a) a balancing adjustment event happens in an income year (the event year) commencing on or after 1 July 2011 for an asset held by an R&D partnership; and (i) the partner can deduct (the old law deductions) under former section 73BA or 73BH of the old Act an amount for one or more income years for the asset; (ii) the partner chooses tax offsets under former section 73I of the old Act instead of deductions (also the old law deductions) under those former sections for one or more income years for the asset; and (d) the partner is registered under section 27A of the Industry Research and Development Act 1986 for one or more R&D activities for the event year; and (i) the R&D partnership could deduct for the event year an amount under subsection 40‑285(2) of that Act for the asset and the balancing adjustment event; or (ii) an amount would be included in the R&D partnership’s assessable income for the event year under subsection 40‑285(1) of that Act for the asset and the balancing adjustment event. > Note 1: This section applies even if the partner is entitled under section 355‑100 of the new Act to tax offsets for one or more income years for deductions under section 355‑520 of that Act for the asset. (2) For the purposes of paragraph (1)(e), assume that Division 40 of the new Act applied with the changes described in section 355‑310 of that Act, but with these changes to that section: <table cellspacing="0" cellpadding="0" style="width:365.25pt; border-collapse:collapse"><thead><tr><td colspan="3" style="width:354.45pt; border-top:1.5pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top">Changes to be made to section 355‑310 of the new Act</td></tr><tr><td style="width:21.3pt; border-top:0.75pt solid #000000; border-bottom:1.5pt solid #000000; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top">Item</td><td style="width:92.8pt; border-top:0.75pt solid #000000; border-bottom:1.5pt solid #000000; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top">For a reference in section 355‑310 to...</td><td style="width:218.75pt; border-top:0.75pt solid #000000; border-bottom:1.5pt solid #000000; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top">substitute a reference to...</td></tr></thead><tbody><tr><td style="width:21.3pt; border-top:1.5pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top">1</td><td style="width:92.8pt; border-top:1.5pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top">section 355‑315</td><td style="width:218.75pt; border-top:1.5pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top">this section</td></tr><tr><td style="width:21.3pt; border-top:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top">2</td><td style="width:92.8pt; border-top:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top">the purpose of conducting one or more of the R&D activities to which the R&D deductions (within the meaning of that section) relate</td><td style="width:218.75pt; border-top:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top">both:(a) the purpose of conducting one or more of the research and development activities (within the meaning of former section 73B of the old Act) to which the old law deductions relate; and(b) the purpose of conducting one or more of the R&D activities to which the new law deductions (if any) relate</td></tr><tr><td style="width:21.3pt; border-top:0.75pt solid #000000; border-bottom:1.5pt solid #000000; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top">3</td><td style="width:92.8pt; border-top:0.75pt solid #000000; border-bottom:1.5pt solid #000000; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top">R&D entity</td><td style="width:218.75pt; border-top:0.75pt solid #000000; border-bottom:1.5pt solid #000000; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top">R&D partnership</td></tr></tbody></table> ``` if Division 40 of that Act applied as described in subsection (2) of this section, the partner is taken to be able to deduct under subsection 355‑525(2) of the new Act the partner’s proportion of that amount for the event year. (4) If an amount (the section 40‑285 amount) would be included in the R&D partnership’s assessable income for the event year under subsection 40‑285(1) of the new Act for the asset and the event if Division 40 of that Act applied as described in subsection (2) of this section, the sum of: is taken to be included in the partner’s assessable income for the event year under subsection 355‑525(3) of the new Act: ![Start formula Adjusted section 40-285 amount times open bracket start fraction Old law 1.25 rate deductions over Total decline in value end fraction close bracket times start fraction 1 over 4 end fraction end formula](image.028.png) > adjusted section 40‑285 amount means so much of the section 40‑285 amount as does not exceed the total decline in value. > old law 1.25 rate deductions means the sum of the partner’s notional Division 40 deductions, and notional Division 42 deductions, (if any) for the asset that were multiplied by 1.25 in working out the old law deductions. > total decline in value means the asset’s cost, less its adjustable value, worked out under Division 40 of the new Act as it applies as described in subsection (2). (4A) In applying Division 355 of the new Act in relation to the asset for the income year, if one or more partners (including the partner) in the R&D partnership is entitled under section 355‑100 of the new Act to tax offsets for one or more income years for deductions under section 355‑520 of that Act for the asset, the partner is taken to have: (a) if an amount is taken to be included in the R&D entity’s assessable income for the event year as mentioned in subsection (4) of this section—a clawback amount under section 355‑448 of the new Act for the income year equal to the amount mentioned in subsection (4B) of this section; or (b) if the partner is taken to be able to deduct an amount as mentioned in subsection (3) of this section—a catch up amount under section 355‑467 of the new Act for the income year equal to the amount of that deduction. ![Start formula Adjusted section 40-285 amount times start fraction Sum of new law deductions over Total decline in value end fraction end formula](image.030.png) > adjusted section 40‑285 amount means so much of the section 40‑285 amount as does not exceed the total decline in value. > sum of new law deductions means the sum of each partner’s deductions under section 355‑520 of the new Act mentioned in subsection (4A) of this section. > total decline in value means the asset’s cost, less its adjustable value, worked out under Division 40 of the new Act as it applies as described in subsection (2) of this section. (b) former section 73BF of the old Act (as that section applies because of Part 2 of Schedule 4 to the Tax Laws Amendment (Research and Development) Act 2011); to the extent that they would otherwise apply apart from this section to the partner for the event, do so apply to the partner for the event. > Note 1: Section 355‑525 of the new Act would otherwise apply for the event in a case where the partner had new law deductions. Item 7 of the table in subsection 57‑110(2) in Schedule 2D to the Income Tax Assessment Act 1936 applies as if the deduction rules set out in the final column of that item also included former sections 73BA and 73BH of the Income Tax Assessment Act 1936. For the purposes of step 1 of the method statement in subsection 355‑415(2) of the Income Tax Assessment Act 1997, also disregard amounts that have already been taken into account under former subsection 73B(14AA) of the Income Tax Assessment Act 1936 for the R&D entity, the grouped entity and the R&D activities for an earlier income year. (1) This section applies if, apart from former paragraph 73B(10)(a) of the Income Tax Assessment Act 1936, an eligible company could deduct advance R and D expenditure in one or more income years commencing on or after 1 July 2011. > Note: That deduction would be under former section 73B of that Act as that former section applies because of Part 2 of Schedule 4 to the Tax Laws Amendment (Research and Development) Act 2011. (a) apart from Subdivision H (prepaid expenditure) of Division 3 of Part III of the Income Tax Assessment Act 1936, an eligible company can deduct an amount under former section 73B, 73BA, 73BH, 73QA, 73QB or 73Y of that Act for an income year commencing before 1 July 2011; and (c) apart from former paragraph 73B(10)(a) of that Act, the eligible company could deduct an amount, as a result of that application of that Subdivision, for an income year commencing on or after 1 July 2011. > Note: That deduction would be under that Act as it applies because of Part 2 of Schedule 4 to the Tax Laws Amendment (Research and Development) Act 2011. (3) Former paragraph 73B(10)(a) of that Act is taken to apply to those income years commencing on or after 1 July 2011 as if the reference in that former paragraph to section 39J of the Industry Research and Development Act 1986 were a reference to section 27A of that Act. (4) An expression used in this section that is also used in former section 73B of the Income Tax Assessment Act 1936 has the same meaning in this section as it has in that former section. This Subdivision applies to core technology (within the meaning of former section 73B of the Income Tax Assessment Act 1936) if: (a) you incurred core technology expenditure (within the meaning of that former section) in an income year commencing before 1 July 2011 in relation to the core technology under one or more contracts entered into at or after the time referred to in former subsection 73B(12) of that Act; and (b) that expenditure (the undeducted expenditure) cannot be deducted for the last income year commencing before 1 July 2011. (1) This section applies for the purposes of Division 40 of the Income Tax Assessment Act 1997, other than sections 40‑292 and 40‑293 of that Act, if the core technology (the asset) is a depreciating asset. (2) Disregard this section, including its effect on the amount you can deduct under section 40‑25 of that Act for the asset, for the purposes of working out: (3) The asset’s opening adjustable value for the first income year that commences on or after 1 July 2011 (the first new income year) is equal to the amount of the undeducted expenditure. (4) Subsection 40‑75(2) of the Income Tax Assessment Act 1997 applies to the asset as if the first new income year were a change year (within the meaning of that subsection). If the core technology is not a depreciating asset, you can deduct the undeducted expenditure in equal proportions over a period of 5 income years starting in the first income year commencing on or after 1 July 2011. To work out the film component (if any) of your tax loss for the 1997‑98 income year or a later income year, apply former section 375‑805 of the Income Tax Assessment Act 1997. If you incurred a film loss for the purposes of former section 79F (Film losses of 1989‑90 to 1996‑97 years of income) of the Income Tax Assessment Act 1936 in any of the 1989‑90 to 1996‑97 income years, that film loss is the film component of your tax loss for that income year. (1) To work out your film loss (if any) for the purposes of the Income Tax Assessment Act 1997 for the 1989‑90 or a later income year, apply former section 375‑810 of that Act. (2) You can deduct in the 1997‑98 or a later income year your film loss for any of the 1989‑90 to 1996‑97 income years only to the extent that it has not already been deducted. (1) Division 392 of the Income Tax Assessment Act 1997 applies to assessments for the 1998‑99 income year and later income years. (a) it had applied to your assessment for each income year before the 1998‑99 income year for which Division 16 of Part III of the Income Tax Assessment Act 1936 applied in relation to your income; and (b) you had carried on a primary production business during each income year before the 1998‑99 income year when you carried on a business of primary production; and (c) for each income year before the 1998‑99 income year you had a basic taxable income equal to your taxable income for the income year for the purposes of Division 16 of Part III of the Income Tax Assessment Act 1936. > Note: Section 149A of the Income Tax Assessment Act 1936 identifies what your taxable income for an income year is for the purposes of Division 16 of Part III of that Act.