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This is a Bill, not an Act. For current law, see the Acts databases.
1996
The Parliament of
the
Commonwealth of
Australia
HOUSE OF
REPRESENTATIVES
Presented and read a first
time
Taxation Laws
Amendment Bill (No. 2) 1996
No. ,
1996
(Treasury)
A Bill
for an Act to amend the law relating to taxation
9609820—1,1675/26.6.1995—(98/96) Cat.
No. 96 4856 9 ISBN 0644 443782
Contents
Part 1—Offshore banking
units 6tla20h1.html
Part 2—Complying funds: expenses of investing in
pooled
superannuation trusts or life assurance
policies 6tla20h1.html
Part 3—Deductions for
gifts 6tla20h1.html
Part 4—Repeal of section
261 6tla20h1.html
Part 5—Taxation of income derived from sources outside
Australia 6tla20h1.html
Part
1—Insertion of new Schedule
2C 6tla20h1.html
Part 2—Consequential
amendments 6tla20h1.html
Part
1—Superannuation Industry (Supervision) Act
1993 6tla20h1.html
Part 2—Income Tax Assessment Act
1936 6tla20h1.html
A Bill for an Act to amend the law relating to
taxation
The Parliament of Australia enacts:
This Act may be cited as the Taxation Laws Amendment Act (No. 2)
1996.
(1) Subject
to this section, this Act commences on the day on which it receives the Royal
Assent.
(2) Items 44, 45 and 46 of Schedule 1 are taken to have commenced on 1
January 1993.
(3) Schedule 2 is taken to have commenced on 27 June 1996.
(4) Schedule 4 commences on the 60th day after the day on which this Act
receives the Royal Assent.
(5) Items 1, 2 and 3 of Schedule 6 are taken to have commenced immediately
after the commencement of Schedule 1 to the Taxation Laws Amendment Act (No.
4) 1995.
(6) Items 4 and 5 of Schedule 6 are taken to have commenced immediately
after the commencement of items 1 and 2 of Schedule 2 to the Taxation
Laws Amendment Act (No. 4) 1995.
Subject to section 2, each Act that is specified in a Schedule to this
Act is amended or repealed as set out in the applicable items in the Schedule
concerned, and any other item in a Schedule to this Act has effect according to
its terms.
Section 170 of the Income Tax Assessment Act 1936 does not prevent
the amendment of an assessment made before the commencement of this section for
the purposes of giving effect to this Act.
1 Section 121C (definition of assessable OB
income)
Omit “subsection 121EE(2)”, substitute “subsections
121EE(2) and (3A)”.
2 Section 121C
Insert:
Australian thing has the meaning given by subsection
121DA(5).
3 Section 121C
Insert:
average Australian asset percentage has the meaning given by
subsection 121DA(2).
4 Section 121C
Insert:
monthly Australian asset percentage has the meaning given by
subsection 121DA(3).
5 Section 121C
Insert:
portfolio investment has the meaning given by subsection
121DA(1).
6 Paragraph 121D(1)(e)
After “subsection (6)”, insert “or (6A)”.
7 Paragraphs 121D(2)(a) and
(b)
After “applies”, insert “and is not an
OBU”.
8 Subsection 121D(6)
After “making”, insert “(but not
managing)”.
9 Subsection 121D(6)
Omit “, or so making and managing such an
investment”.
10 After subsection 121D(6)
Insert:
Investment activity—portfolio investment
(6A) For the purposes of paragraph (1)(e), an investment
activity is also the managing by an OBU of a portfolio investment (see
subsection 121DA(1)) for the whole or part (the investment management
period) of a year of income, where:
(a) the portfolio investment is managed as broker or agent for, or trustee
for the benefit of, a non-resident; and
(b) the portfolio investment was made by the OBU; and
(c) the portfolio investment was made with a non-resident (except to the
extent that making the investment consisted of making a loan or purchasing an
Australian thing); and
(d) the currency in which the portfolio investment was made was not
Australian currency; and
(e) if the portfolio investment consists of only a single thing—the
thing is not an Australian thing (see subsection 121DA(5)); and
(f) if paragraph (e) does not apply—the average Australian asset
percentage (see subsection 121DA(2)) of the portfolio investment is not more
than 10%.
11 After section 121D
Insert:
Portfolio investment
(1) If, under a contract or trust instrument, an OBU manages one or more
investments as broker or agent for, or trustee for the benefit of, a
non-resident, the investment, or all of the investments, constitute a
portfolio investment.
Average Australian asset percentage
(2) The average Australian asset percentage of a portfolio
investment is the average, for all months that wholly or partly fall within the
investment management period (see subsection 121D(6A)), of the monthly
Australian asset percentages (see subsection (3)) of all of the things
comprising the portfolio investment.
Monthly Australian asset percentage
(3) For the purposes of subsection (2), the monthly Australian asset
percentage of the things for a month is the percentage of the total
value of all of the things comprising the portfolio investment, for the month,
that is represented by the value of Australian things.
Basis for working out percentage
(4) The percentage in subsection (3) must be worked out according to
reasonable accounting practice that applies on the same basis for all months
falling wholly or partly within the investment management period.
Australian thing
(5) A thing is an Australian thing at a particular time
if:
(a) where the thing is a share in a company—the company is a
resident company at the time; or
(b) where the thing is a unit in a unit trust—the unit trust is a
resident trust (within the meaning of section 102Q) in relation to the year of
income in which the time occurs; or
(c) where the thing is land or a building—the land or building is in
Australia; or
(d) where the thing is a loan—the loan was made to an Australian
resident; or
(e) in any other case—the thing is located in Australia at the
time.
12 Subsection 121EE(2)
Omit “The”, substitute “Subject to subsection (3A),
the”.
13 After subsection
121EE(3)
Insert:
Reduction of assessable OB income because of certain investment
activities
(3A) If OB activities of the OBU or the part of the OBU to which paragraph
121EB(1)(c) applies include an investment activity within the meaning of
subsection 121D(6A), any assessable income derived from the investment activity
that would otherwise be taken into account under subsection (2) is reduced by
the average Australian asset percentage (within the meaning of subsection
121DA(2)) of the portfolio investment concerned.
14 At the end of section
121EI
Add:
No deduction if foreign tax credit is available
(2) However, foreign tax paid by the OBU on those amounts is not an
allowable deduction if the OBU is entitled to a credit under Division 18 in
respect of the foreign tax.
Note: The following heading to subsection 121EI(1) is
inserted: “Deduction for foreign tax”.
15 Paragraph 121EL(c)
Omit “of a kind to which subsection 121D(6) applies”,
substitute “covered by subsection 121D(6) or (6A)”.
16 Paragraphs 121EL(d) and
(e)
Omit “such investment activities”, substitute “an
investment activity covered by subsection 121D(6)”.
17 At the end of section
121EL
Add:
; and (f) any income of the trust estate derived from an investment
activity covered by subsection 121D(6A) is exempt from income tax, in so far as
the income exceeds the average Australian asset percentage (within the meaning
of subsection 121DA(2)) for the portfolio investment concerned; and
(g) if, apart from this section, a capital gain would accrue to, or a
capital loss would be incurred by, the trust estate under Part IIIA in respect
of the disposal of any asset in the course of, or in connection with, an
investment activity covered by subsection 121D(6A)—only the average
Australian asset percentage (for the portfolio investment concerned) of the gain
so accrues, or of the loss is so incurred.
18 Subsection 128AE(1)
Insert:
offshore gold borrowing means borrowing gold from an offshore
person within the meaning of section 121E.
19 Subsection 128AE(1)
Insert:
tax exempt gold means gold that is tax exempt gold under this
section.
20 Subsection 128AE(4)
After “offshore borrowing” (wherever occurring), insert
“or offshore gold borrowing”.
21 Subsections 128AE(4), (5), (7), (8), (9) and
(11)
After “tax exempt loan money” (wherever occurring), insert
“or tax exempt gold”.
22 Subsection 128AE(8)
After “an amount”, insert “of money or
gold”.
23 Subsections 128AE(9) and
(11)
After “offshore borrowing” (wherever occurring), insert
“or an offshore gold borrowing”.
24 Subsection 128GB(1)
Repeal the subsection, substitute:
(1) This section applies to:
(a) interest paid by a person in respect of an offshore borrowing of the
person; or
(b) interest consisting of gold paid by a person in respect of an offshore
gold borrowing of the person;
if, when the borrowing took place, the person was an offshore banking unit
(whether or not the person is still an offshore banking unit when the interest
is paid).
25 Subsection 128GB(3)
After “offshore borrowing” (wherever occurring), insert
“or offshore gold borrowing”.
26 Subsection 128GB(4) (definition of
offshore loan)
After “a loan”, insert “of money or
gold”.
27 Section 128NB
After “tax exempt loan money” (wherever occurring), insert
“or tax exempt gold”.
28 Paragraph 128NB(1)(b)
After “offshore borrowing”, insert “or offshore gold
borrowing”.
29 Application
(1) The amendments made by items 1 to 17 apply to assessments of income of
the 1996-97 year of income and of all later years of income.
(2) The amendments made by the other items in this Part apply to interest
paid by an OBU during the 1996-97 year of income and all later years of
income.
Part
2—Complying funds: expenses of investing in pooled superannuation trusts
or life assurance policies
30 After section 279D
Insert:
(1) This section applies if a complying superannuation fund incurs
expenditure in acquiring, holding or disposing of, or otherwise in relation to,
an investment consisting of:
(a) units in a PST; or
(b) life assurance policies issued by a life assurance company or a
registered organisation; or
(c) an interest in a trust whose assets consist wholly of life assurance
policies issued by a life assurance company or a registered
organisation.
(2) In determining whether a deduction is allowable from the assessable
income for the expenditure, it is to be assumed that:
(a) any profit or gain of a capital nature that the fund would derive in
respect of the investment would instead be of an income nature; and
(b) paragraph 26AH(7)(b) and section 282A (which deal with excluding
bonuses from assessable income) had not been enacted.
31 After section 289
Insert:
(1) This section applies if a complying ADF incurs expenditure in
acquiring, holding or disposing of, or otherwise in relation to, an investment
consisting of:
(a) units in a PST; or
(b) life assurance policies issued by a life assurance company or a
registered organisation; or
(c) an interest in a trust whose assets consist wholly of life assurance
policies issued by a life assurance company or a registered
organisation.
(2) In determining whether a deduction is allowable from the assessable
income for the expenditure, it is to be assumed that:
(a) any profit or gain of a capital nature that the fund would derive in
respect of the investment would instead be of an income nature; and
(b) paragraph 26AH(7)(b) and section 291A (which deal with excluding
bonuses from assessable income) had not been enacted.
32 Application
The amendments made by this Part apply to assessments for the year of
income in which 1 July 1988 occurred and all later years of income.
33 Subsection 78(3) (after the entry relating to
Australian Sports Foundation)
Insert:
|
Borneo Memorials Trust Fund |
(4) - Table 5, item 5.2.9 |
34 Subsection 78(3) (after the entry relating to
Brisbane RAAF Memorial Fund)
Insert:
|
Central Synagogue Restoration Fund |
(4) - Table 5, item 5.2.8 |
35 Subsection 78(4) (at the end of Table
5)
Add:
|
5.2.8 |
The Central Synagogue Restoration Fund |
the gift must be made after 22 December 1995 and before
23 December 1997 |
|
5.2.9 |
The Borneo Memorials Trust Fund |
the gift must be made after 22 December 1995 and before
23 December 1997 |
36 Section 261
Repeal the section.
37 Application
The repeal applies to mortgages entered into after 27 June 1996.
Part
5—Taxation of income derived from sources outside
Australia
38 After subsection
160AFB(5)
Insert:
(5A) Despite paragraph (4)(b) and subsection (5), in determining for the
purposes of this section:
(a) whether a company has a voting interest in another company;
and
(b) the extent of that interest;
any appointment of a liquidator in respect of the other company is to be
disregarded.
39 Subparagraph
160ZZO(2D)(b)(ii)
Omit “taxable Australian roll-over asset”, substitute
“taxable Australian asset”.
40 Section 419 (subparagraph (i) of the
paragraph (1)(a) substituted by that section for paragraph
160ZZO(1)(a))
Omit all the words before sub-subparagraph (A), substitute:
(i) a company (the transferor) that is a CFC, and a resident
of a listed country, at a particular time disposed of an asset (a
roll-over asset) at that time to another company (the
transferee), where any of the following sub-subparagraphs
apply:
41 Section 419 (sub-subparagraph (C) of
subparagraph (i) of the paragraph (1)(a) substituted by that section for
paragraph 160ZZO(1)(a))
Before “asset”, insert “roll-over”.
42 Section 419 (subparagraph (ii) of the
paragraph (1)(a) substituted by that section for paragraph
160ZZO(1)(a))
Omit “an asset”, substitute “a roll-over
asset”.
43 Subsection 529(2)
Repeal the subsection, substitute:
(2) If foreign investment fund income accrued to a taxpayer to whom this
section applies from a FIF or a FLP in respect of a notional accounting period
of the FIF or FLP, the taxpayer’s assessable income of the year of income
in which the notional accounting period ended includes:
(a) if the taxpayer was a resident throughout the whole of the notional
accounting period—the foreign investment fund income; or
(b) if the taxpayer was a resident throughout a part or parts of the
notional accounting period—so much of the foreign investment fund income
as is worked out using the formula:
In the formula in paragraph (b):
foreign investment fund income means the amount of the
foreign investment fund income that accrued to the taxpayer from the FIF or FLP
in respect of the notional accounting period.
number of days of residence means the number of days in the
notional accounting period throughout which the taxpayer was a
resident.
total number of days means the number of days in the notional
accounting period.
44 Paragraph 530(1)(a)
Repeal the paragraph, substitute:
(a) a FIF attribution account payment is made by a FIF or a FLP to a
taxpayer during a notional accounting period of the FIF or FLP, as the case may
be; and
45 Paragraph 530(1)(b)
After “FIF”, insert “or FLP”.
46 After paragraph
530(1)(c)
Insert:
(ca) was included in the taxpayer’s assessable income of the year of
income that immediately preceded the year of income referred to in paragraph
(b); or
47 Application
(1) The amendment made by item 38 is taken to have applied to assessments
in respect of income of the 1987-88 year of income and later years of
income.
(2) The amendments made by items 39, 40, 41 and 42 apply to disposals of
assets that occurred or occur after 2 April 1992.
(3) The amendment made by item 43 applies to assessments in respect of
income of the 1996-97 year of income and later years of income.
Part
1—Insertion of new Schedule 2C
1 After Schedule 2B
Insert:
This Division applies if:
(a) a debt or part of a debt ceases to be payable because the obligation
to pay the debt or part is released or waived, or is otherwise extinguished
(this is referred to as the forgiveness of the debt or part);
and
(b) there are amounts (reducible amounts) that would
otherwise be taken into account in reducing the debtor’s taxable income of
the year of income in which the debt is forgiven or a later year of
income.
The forgiven amount of the debt is treated as having been used to generate
the reducible amounts and is accordingly applied to reduce them in a particular
order.
If the debtor is a company that is included in a group of related
companies, the forgiven amount of the debt may be treated as having been used to
generate reducible amounts of one or more of the other companies.
(1) This Division applies to the forgiveness of the whole or a part of a
commercial debt.
(2) The forgiveness of a debt under an Act relating to bankruptcy, by
will, or for reasons of natural love and affection, is not affected by the
provisions of the Division.
(3) Provision is made for the calculation of the gross forgiven
amount in respect of each debt.
(4) The gross forgiven amount may then be reduced by certain amounts that
are taken into account in assessing the debtor’s taxable income apart from
this Division.
(5) If the debt is owed between group companies, the gross forgiven amount
may be further reduced in certain circumstances.
(6) The amount remaining after all reductions to the gross forgiven amount
is the net forgiven amount in respect of the debt.
(7) The total net forgiven amount of all debts of a
particular debtor that are forgiven in the same year of income (the
forgiveness year of income) is to be applied in reduction of
certain amounts that may otherwise be taken into account in assessing the
debtor’s taxable income.
(8) The amounts to be reduced are certain revenue losses, net capital
losses and other deductible amounts and the cost bases of certain
assets.
(9) Special rules apply in respect of debts of partnerships other than
corporate limited partnerships.
(10) Special rules apply in respect of debts of a company if the company
is included in a group of related companies.
The purpose of this Subdivision is to identify the debts to which this
Division applies.
(1) Subject to subsection (2), this Division applies to a forgiveness of
a commercial debt but so applies only if the forgiveness occurs after the
commencement day.
(2) This Division does not apply to a forgiveness referred to in
subsection (1) if the forgiveness occurs in accordance with the terms of an
agreement or arrangement that:
(a) was entered into on or before the commencement day; and
(b) is evidenced in writing otherwise than by a document evidencing the
agreement or transaction under which the debt arose.
(1) Subject to this section, a debt is an enforceable
obligation imposed by law on a person to pay an amount to another
person.
(2) If such an obligation is waived and the waiver constitutes a fringe
benefit within the meaning of the Fringe Benefits Tax Assessment Act
1986, the debt constituted by the obligation is to be disregarded for the
purposes of this Division.
(3) An amount that, apart from this subsection, would be an enforceable
obligation referred to in subsection (1) is not to be regarded as a debt if the
amount has been, or will be, included in the assessable income of any year of
income of the person on whom the obligation is imposed.
If there is, in respect of a debt, any interest or amount in the nature
of interest that has accrued but has not been paid, the obligation to pay that
interest or amount is not a separate debt but the first-mentioned debt includes
the obligation to pay the interest or amount.
(1) A debt is a commercial debt if it falls within any of
the following provisions of this section.
Debt on which interest paid is an allowable deduction
(2) A debt is a commercial debt if the whole or any part of interest, or
of an amount in the nature of interest, paid or payable in respect of the
debt:
(a) is or would be allowable as a deduction to the debtor; or
(b) would be so allowable apart from the operation of an exception
provision.
Debt on which no interest is payable
(3) A debt is a commercial debt if interest, or an amount in the nature of
interest, is not payable in respect of the debt but, had interest or such an
amount been payable, the whole or any part of the interest or amount:
(a) would have been allowable as a deduction to the debtor; or
(b) would have been so allowable apart from the operation of an exception
provision.
Amounts paid on shares in respect of which debt dividends are
paid
(4) A share issued by a company is taken to be a commercial debt owed by
the company to the shareholder if a dividend paid in respect of the share would
be a debt dividend within the meaning of subsection 46C(1) or 46D(1).
Meaning of exception provision
(5) In this section:
exception provision means a provision of this Act that has
the effect of preventing a deduction that would otherwise be allowable, but does
not include an exception contained in subsection 51(1).
This Division applies to a person in the capacity of a trustee of a trust
estate in respect of the trust estate’s debts, and references in this
Division to a debtor include a reference to a person in the capacity of a
trustee of a trust estate in respect of the trust estate’s
debts.
This Subdivision explains the circumstances in which a debt is taken to
have been forgiven for the purposes of this Division.
Obligation to pay debt forgiven
(1) A debt is forgiven if the debtor’s obligation to pay the debt is
released or waived, or is otherwise extinguished.
Right to sue for debt ceases because of statute of
limitations
(2) A debt is forgiven if the period within which the creditor is entitled
to sue for the recovery of the debt ends because of the operation of a statute
of limitations without the debt having been paid.
Agreement to end obligation to pay debt with effect from a future
time
(3) If:
(a) the debtor and creditor in relation to a debt enter into an agreement
or arrangement (whether or not enforceable by legal proceedings); and
(b) under the agreement or arrangement the debtor’s obligation to
pay the whole or a part of the debt is to cease at a particular future time;
and
(c) the cessation of the obligation is to occur without the debtor
incurring any financial or other obligation (other than an obligation that,
having regard to the debtor’s circumstances, is of a nominal or
insignificant amount or kind);
the debt or the part of the debt is taken to be forgiven when the agreement
or arrangement is entered into. If, after the agreement or arrangement is
entered into, the debt or the part of the debt is forgiven, the last-mentioned
forgiveness is disregarded for the purposes of this Division.
Debt parking
(4) If:
(a) the creditor, in relation to a debt, assigns the right to receive
payment of the debt to another person (the new creditor);
and
(b) either:
(i) the new creditor is an associate of the debtor; or
(ii) the assignment occurred under an agreement or arrangement to which
the new creditor and the debtor were parties; and
(c) the right to receive payment of the debt was not acquired by the new
creditor in the ordinary course of trading on a securities market;
this Division has effect as if:
(d) the debtor had, at the time of the assignment, been forgiven a debt
(the notional debt) equal to the amount of the assigned debt;
and
(e) the net forgiven amount of the notional debt were equal to the amount
that would have been the net forgiven amount of the assigned debt if that debt
had been forgiven instead of being assigned.
Subscription for shares to enable debt to be paid
(5) If:
(a) a person subscribes for shares in a company to enable the company to
make a payment in or towards discharge of a debt owed by it to the person;
and
(b) the company applies all or any of the money subscribed in or towards
payment of the debt;
then:
(c) so much of the debt as is paid out of the money so applied is taken to
be forgiven; and
(d) the time of the forgiveness is taken to be the time when the money is
so applied.
Definition
(6) In this section:
securities market means a market, exchange or other place on
which, or a facility by means of which, offers to sell, buy or exchange
securities (within the meaning of Division 16E of Part III) are made or
accepted.
This Division does not apply to a forgiveness of a debt if:
(a) the forgiveness is effected under an Act relating to bankruptcy;
or
(b) the forgiveness is effected by will; or
(c) the debt is forgiven for reasons of natural love and
affection.
If a debt is forgiven, this Subdivision sets out the steps to be followed
in calculating the gross forgiven amount of the debt.
(a) The first step is to work out the notional value of a
debt that has been forgiven
• The notional value of the debt is calculated as at the time when
the debt was forgiven on the basis that the debt was an asset of the creditor at
that time.
• The notional value of the debt is worked out for the purpose of
calculating the gross forgiven amount of the debt.
• A special rule applies for the purpose of working out the notional
value of a non-recourse debt.
• Another special rule applies for the purpose of working out the
notional value of a debt that has been parked.
(b) The second step is to work out the consideration (if any) in respect
of the forgiveness of the debt.
(c) If no such consideration was paid or given, the gross forgiven
amount of the debt is equal to the notional value of the debt.
(d) If any such consideration was paid or given, the gross forgiven
amount of the debt is obtained by deducting the consideration from the
notional value of the debt.
If any consideration is paid or given in respect of the forgiveness of a
debt, the debt that is forgiven is taken to be:
(a) the obligation that existed before the forgiveness to pay so much of
the debt as is expressed, or is taken, to be forgiven; and
(b) the obligation that existed before the forgiveness to pay any part of
the debt to which paragraph (a) does not apply but which ceases to be payable as
a result of the payment or giving of the consideration.
(1) Subject to sections 245-60 and 245-61, the notional value
of a debt at the time when it was forgiven is the lesser of the amount
worked out under subsection (2) (the first applicable amount) and
the amount worked out under subsection (3) (the second applicable
amount).
(2) The first applicable amount is the amount that would
have been the value of the debt (considered as an asset of the creditor) at the
time when it was forgiven if:
(a) except where subsection (4) applies in relation to the debt, at the
time when the debt was incurred the debtor was able to pay all the
debtor’s debts (including the debt concerned) as and when they fell due;
and
(b) the debtor’s capacity to pay the debt at the time when it was
forgiven was the same as the debtor’s capacity to pay the debt at the time
when it was incurred.
(3) The second applicable amount is the sum of the following
amounts:
(a) the amount that would have been the value of the debt (considered as
an asset of the creditor) at the time when it was forgiven if:
(i) except where subsection (4) applies in relation to the debt, at the
time when the debt was incurred the debtor was able to pay all the
debtor’s debts (including the debt concerned) as and when they fell due;
and
(ii) the debtor’s capacity to pay the debt at the time when it was
forgiven was the same as the debtor’s capacity to pay the debt at the time
when it was incurred; and
(iii) no changes occurred, between the time when the debt was incurred and
the time when the debt was forgiven, in any market variables; and
(b) the amount or the sum of the amounts of any deduction or deductions
that:
(i) have been allowed or are allowable to the debtor as a result of the
forgiveness of the debt; and
(ii) are attributable to changes in market variables that occurred between
the time when the debt was incurred and the time when the debt was
forgiven.
(4) Paragraph (2)(a) and subparagraph (3)(a)(i) do not apply in relation
to a debt if both of the following apply:
(a) the debtor and the creditor were not dealing with each other at
arm’s length in respect of the incurring of the debt;
(b) the debt is not a moneylending debt.
(5) In this section:
market variables, in relation to a debt, means changes in
rates of interest, and changes in the rates of exchange between currencies, that
affect the value of the debt.
(1) This section applies to a debt (the non-recourse debt)
if the debt was incurred directly in respect of the financing of the cost of the
acquisition, construction or development of property (but not including the
manufacture of goods) by the debtor and the rights of the creditor as against
the debtor in the event of default in the payment of the debt or the payment of
interest are limited to all or any of the following:
(a) rights (including the right to moneys payable) in relation to all or
any of the following:
(i) the property or the use of the property;
(ii) goods produced, supplied, carried, transmitted or delivered, or
services provided, by means of the property;
(iii) the loss or disposal of the whole or a part of the property or of
the debtor’s interest in the property;
(b) rights in respect of a mortgage or other security over the
property;
(c) rights arising out of any arrangement relating to the financial
obligations, in relation to the property, of the end-user of the property
towards the debtor.
(2) The notional value of a non-recourse debt at the time
when it was forgiven is the lesser of the following:
(a) the amount of the non-recourse debt outstanding at that
time;
(b) the market value at that time of the creditor’s rights referred
to in subsection (1) of this section.
(3) In this section:
end-user, in relation to property, has the same meaning as in
section 51AD.
If a debt that has been assigned as mentioned in subsection 245-35(4) is
forgiven, the notional value of that debt is:
(a) if the debt was not a moneylending debt and the creditor and the new
creditor were not dealing with each other at arm’s length in connection
with the assignment—the market value of the debt at the time of the
assignment; or
(b) in any other case—the sum of:
(i) the amount or value of the consideration (if any) that the debtor has
paid or given, or is required to pay or give, to the creditor in respect of the
assignment; and
(ii) the amount or value of the consideration (if any) paid or given by
the new creditor in respect of the assignment.
(1) Subject to subsection (2), the consideration in respect
of the forgiveness of a debt (other than a debt to which subsection (3) or (4)
applies) is:
(a) if the debtor has paid, or is required to pay, an amount or amounts of
money as a result of, or in respect of, the forgiveness of the debt:
(i) if the debt is not a moneylending debt—that amount or the sum of
those amounts; or
(ii) if the debt is a moneylending debt—the sum of the amount or
amounts (if any) that the debtor has paid and the market value, at the time of
the forgiveness, of the debtor’s obligation to pay an amount or amounts;
or
(b) if the debtor has given, or is required to give, property other than
money as a result of, or in respect of, the forgiveness of the debt—the
market value of the property at the time of the forgiveness; or
(c) if the debtor has paid or given, or is required to pay or give, both
an amount or amounts of money and property other than money as a result of, or
in respect of, the forgiveness of the debt:
(i) if the debt is not a moneylending debt—the sum of that amount or
those amounts and the market value of the property at the time of the
forgiveness; or
(ii) if the debt is a moneylending debt—the sum of the amount or
amounts (if any) that the debtor has paid, the market value, at the time of the
forgiveness, of the property (if any) that the debtor has given and the market
value, at the time of the forgiveness, of the debtor’s obligation to pay
any amount or amounts or to give any property.
(2) If a debt (other than a moneylending debt) to which subsection (1)
applies is forgiven and:
(a) there is no consideration in respect of the forgiveness; or
(b) the whole or a part of the consideration in respect of the forgiveness
cannot be valued; or
(c) the amount that, apart from this paragraph, would be taken to be the
amount or value of the consideration in respect of the forgiveness is greater or
less than the market value of the debt at the time of the forgiveness and the
debtor and creditor were not dealing with each other at arm’s length in
connection with the forgiveness;
the debtor is taken to have paid as consideration in respect
of the forgiveness of the debt an amount equal to the market value of the debt
at the time of the forgiveness.
(3) In calculating for the purposes of paragraph 245-35(4)(e) the amount
that would have been the net forgiven amount of an assigned debt referred to in
that paragraph if that debt had been forgiven instead of being
assigned:
(a) if the debt is not a moneylending debt and the creditor and the new
creditor were not dealing with each other at arm’s length in connection
with the assignment—the consideration in respect of the
forgiveness of the debt is taken to be the market value of the debt at the time
of the assignment; or
(b) in any other case—the consideration in the respect
of the forgiveness of the debt is taken to be the sum of:
(i) the amount or value of the consideration (if any) that the debtor has
paid or given, or is required to pay or give, to the creditor in respect of the
assignment; and
(ii) the amount or value of the consideration (if any) paid or given by
the new creditor in respect of the assignment.
(4) If a debt is forgiven by subscribing for shares in a company as
mentioned in subsection 245-35(5), the consideration in respect of
the forgiveness of the debt is the amount worked out using the
formula:
where:
amount applied means the amount applied by the company as
mentioned in paragraph 245-35(5)(b).
amount subscribed means the amount subscribed as mentioned in
paragraph 245-35(5)(a).
market value of shares subscribed for means the market value,
of all the shares in the company that were subscribed for as mentioned in
paragraph 245-35(5)(a), immediately after those shares were issued.
(1) For the purposes of section 245-65:
(a) money or property is taken to have been paid or given to a creditor if
the money or property has been applied for the benefit, or in accordance with
the directions, of the creditor; and
(b) a debtor is taken to be required to pay money or give property to a
creditor if the debtor is required to apply money or property for the benefit,
or in accordance with the directions, of the creditor.
(2) For the purposes of section 245-65, a reference in subsection (1) to
the application of money or property for the benefit of a creditor includes,
without limiting the generality of the expression, a reference to the
application of money or property in the discharge, wholly or partly, of a debt
due by the creditor.
(3) This section does not limit the operation of section 19.
(1) If no consideration is paid or given, or taken to be paid or given, in
respect of the forgiveness of the debt, the gross forgiven amount
of the debt is an amount equal to the notional value of the debt at the time
when the debt was forgiven.
(2) If any consideration is paid or given, or taken to be paid or given,
in respect of the forgiveness of the debt:
(a) where the notional value of the debt at the time when the debt was
forgiven exceeds the consideration—the gross forgiven amount
of the debt is an amount equal to the excess; or
(b) where the notional value of the debt at the time when the debt was
forgiven is equal to or less than the consideration—there is no forgiven
amount in respect of the debt and Subdivisions 245-D to 245-G do not apply in
respect of the debt.
This Subdivision provides for the gross forgiven amount of a debt to be
reduced in certain circumstances.
If the gross forgiven amount is not reduced under this Subdivision, the
gross forgiven amount is also the net forgiven amount of the
debt.
If the gross forgiven amount is reduced under this Subdivision, the amount
remaining after the reduction is the net forgiven amount of the
debt.
(1) The gross forgiven amount of a debt is reduced by the sum of any of
the following amounts that apply in relation to the debtor:
(a) any amount that, under a provision of this Act other than this
Division, has been, or will be, included in the debtor’s assessable income
of any year of income as a result of the forgiveness of the debt;
(b) any amount by which, under a provision of this Act other than this
Division, a deduction that would otherwise be allowable from the debtor’s
assessable income of any year of income has been, or will be, reduced as a
result of the forgiveness of the debt;
(c) any amount by which the cost base to the debtor of any asset for the
purposes of Part IIIA has been, or will be, reduced under that Part as a result
of the forgiveness of the debt.
(2) The amount remaining after reducing the gross forgiven amount under
subsection (1) is:
(a) if section 245-90 does not apply—the net forgiven amount
of the debt; or
(b) if section 245-90 applies—the provisional net forgiven
amount of the debt.
(1) This section applies if:
(a) a debt owed by a company to another company is forgiven; and
(b) throughout the period from the time when the debt was incurred until
the time when the debt is forgiven, the companies were under common
ownership.
(2) If, apart from this subsection, the creditor would have incurred a
capital loss under paragraph 160Z(1)(b) as a result of the forgiveness of the
debt:
(a) the debtor and creditor may agree that the creditor is to forgo so
much of the loss as is stated in the agreement and does not exceed the
provisional net forgiven amount of the debt; and
(b) if such an agreement is made:
(i) the creditor’s capital loss is reduced by the agreed amount;
and
(ii) the provisional net forgiven amount of the debt is also reduced by
the agreed amount; and
(iii) the amount remaining after the reduction of the provisional net
forgiven amount of the debt under subparagraph (ii) is the net forgiven
amount of the debt.
(3) If, apart from this subsection, a deduction in respect of the debt
would be allowable to the creditor under subsection 51(1) or section 63 in the
forgiveness year of income:
(a) the debtor and creditor may agree that the creditor is to forgo so
much of the deduction as is stated in the agreement and does not exceed the
provisional net forgiven amount of the debt; and
(b) if such an agreement is made:
(i) the deduction otherwise allowable to the creditor is reduced by the
agreed amount; and
(ii) the provisional net forgiven amount of the debt is also reduced by
the agreed amount; and
(iii) the amount remaining after the reduction of the provisional net
forgiven amount of the debt under subparagraph (ii) is the net forgiven
amount of the debt.
(4) Neither subsection (2) nor (3) applies in relation to an agreement
unless the agreement:
(a) is in writing and signed by the public officer of the company that is
the debtor and by the public officer of the company that is the creditor;
and
(b) is made before whichever is the earlier of the following:
(i) the date of lodgment of the return of income for the forgiveness year
of income of the company that is the creditor;
(ii) the date of lodgment of the return of income for the forgiveness year
of income of the company that is the debtor;
or before any later date that the Commissioner determines.
This Subdivision provides for the total of the net forgiven amounts (the
total net forgiven amount) of all debts of a particular debtor
that are forgiven in the same year of income (the forgiveness year of
income) to be applied in reduction of amounts that would otherwise be
taken into account in assessing the debtor’s taxable income of the
forgiveness year of income or any later year of income.
This Subdivision does not apply to the calculation of attributable income
of a non-resident trust estate or a controlled foreign company.
This Subdivision does not apply to the calculation of:
(a) attributable income of a non-resident trust estate for the purposes of
Division 6AAA of Part III; or
(b) attributable income of a controlled foreign company for the purposes
of Part X.
(1) Subject to subsection (2), the total of the net forgiven amounts of
all debts of a debtor that are forgiven in the same year of income (the
forgiveness year of income) constitutes the total net
forgiven amount in relation to the debtor in respect of the forgiveness
year of income.
(2) Section 245-215 has effect in calculating the total net forgiven
amount of a partner in a partnership.
(3) Subdivision 245-G has effect in calculating the total net forgiven
amount of a company that is included in a group of related companies.
(4) The total net forgiven amount is to be applied in accordance with this
section before the debtor’s return in respect of income of the forgiveness
year of income is furnished to the Commissioner.
(5) The total net forgiven amount is to be applied first, in accordance
with sections 245-110 to 245-120, in reduction of deductible revenue losses
(if any) incurred by the debtor in years of income before the forgiveness year
of income.
(6) To the extent to which the total net forgiven amount cannot be applied
as mentioned in subsection (5), it is to be applied, in accordance with sections
245-125 to 245-135, in reduction of deductible net capital losses (if any)
incurred by the debtor in respect of the year of income immediately preceding
the forgiveness year of income.
(7) To the extent to which the total net forgiven amount cannot be applied
as mentioned in subsections (5) and (6), it is to be applied, in accordance with
sections 245-140 to 245-160, in reduction of deductible expenditures (if any)
that are to be taken into account in the assessment of the debtor’s
taxable income of the forgiveness year of income or any later year of
income.
(8) To the extent to which the total net forgiven amount cannot be applied
as mentioned in subsections (5), (6) and (7), it is to be applied, in accordance
with sections 245-165 to 245-190, in reduction of the relevant cost bases of
certain assets of the debtor at the beginning of the forgiveness year of
income.
In sections 245-110 to 245-120:
deductible revenue loss means a loss:
(a) that is of a kind described in the table of deductible revenue losses;
and
(b) in respect of which a deduction would, apart from this Subdivision, be
allowable to the debtor in the forgiveness year of income or any later year of
income if the debtor had derived sufficient assessable income in the year of
income concerned (including sufficient assessable income from which the loss
could be deducted).
table of deductible revenue losses means the following
table:
|
Table of deductible revenue losses |
||
|---|---|---|
|
Column 1 |
Column 2 |
|
|
|
Provision under which loss is deductible |
|
|
General domestic losses of post-1989 years of income |
Subsection 79E(3) |
|
|
Film losses of post-1989 years of income |
Subsection 79F(6) |
|
|
General domestic losses of pre-1990 years of income |
Subsection 80(2) |
|
|
Film losses of pre-1990 years of income |
Subsection 80AAA(7) |
|
|
|
|
|
|
Primary production losses of pre-1990 years of income |
Subsection 80AA(4) |
|
|
Foreign losses of pre-1990 years of income |
Subsection 160AFD(1) |
|
|
Foreign losses of post-1989 years of income |
Subsection 160AFD(2) |
|
The total net forgiven amount is to be applied, to the maximum extent
possible, in reduction, in accordance with section 245-120, of deductible
revenue losses (if any).
(1) The debtor may choose:
(a) the order in which the deductible revenue losses are to be reduced;
and
(b) the amount by which each of those losses is to be reduced;
provided that the total net forgiven amount is applied, to the maximum
extent possible, in reduction of deductible revenue losses.
(2) If the debtor does not make a choice for the purposes of subsection
(1), the Commissioner may make the choice on behalf of the debtor in a
reasonable way.
In sections 245-125 to 245-135:
deductible net capital loss means:
(a) a net capital loss (if any) that:
(i) is taken under subsection 160ZC(4), for the purposes of Part IIIA, to
have been incurred by the debtor in respect of the year of income immediately
preceding the forgiveness year of income; and
(ii) would, apart from this Subdivision, be taken into account in
determining whether a net capital gain accrued to the debtor, or the debtor
incurred a net capital loss, in respect of the forgiveness year of income;
or
(b) a net listed personal-use asset loss (if any):
(i) that is taken under subsection 160ZQ(6), for the purposes of section
160ZQ, to have been incurred by the debtor in respect of the year of income
immediately preceding the forgiveness year of income; and
(ii) would, apart from this Subdivision, be taken into account in
determining whether a capital gain accrued to the debtor, or the debtor incurred
a net listed personal-use asset loss, in respect of the forgiveness year of
income.
residual forgiven amount means the total net forgiven amount
to the extent to which it has not been applied in making reductions of
deductible revenue losses.
The residual forgiven amount is to be applied, to the maximum extent
possible, in reduction, in accordance with section 245-135, of deductible net
capital losses (if any).
(1) The debtor may choose:
(a) the order in which the deductible net capital losses are to be
reduced; and
(b) the amount by which each of those losses is to be reduced;
provided that the residual forgiven amount is applied, to the maximum
extent possible, in reduction of deductible net capital losses.
(2) If the debtor does not make a choice for the purposes of subsection
(1), the Commissioner may make the choice on behalf of the debtor in a
reasonable way.
(1) In sections 245-140 to 245-160:
deductible expenditure means expenditure (other than excluded
expenditure):
(a) that is of a kind referred to in the table of deductible expenditure
and was incurred before the forgiveness year of income; and
(b) in respect of which a deduction would, apart from this Subdivision, be
allowable to the debtor in respect of income of the forgiveness year of income
or a later year of income if no event or circumstance (other than a recoupment
of the expenditure in the forgiveness year of income) occurred that would affect
the allowance of the deduction.
excluded expenditure has the meaning given by subsections
(2), (3) and (4).
residual forgiven amount means the total net forgiven amount
to the extent to which it has not been applied in making reductions of
deductible revenue losses and deductible net capital losses.
|
Table of deductible expenditure |
|
|---|---|
|
Column 1 |
Column 2 |
|
|
Provision under which a deduction is allowable in respect of the
expenditure |
|
Cost of plant or articles used (or installed ready for use) to produce
assessable income |
Subsections 54(1), 56(1), 57AK(4) and 57AM(5), (7), (9), (10) and
(11) |
|
Expenditure incurred in borrowing money to produce assessable
income |
Subsection 67(1) |
|
Expenditure on a telephone line on land on which a business of primary
production is carried on |
Subsection 70(2) |
|
Expenditure in connecting or upgrading mains electricity facilities on land
used or intended for use in producing assessable income |
Subsection 70A(3) |
|
Expenditure on scientific research |
Subsection 73A(2) |
|
Expenditure in connection with clearing and preparing land for primary
production |
Subsection 75A(3) |
|
Expenditure on establishing a grape vine |
Subsection 75AA(1) |
|
Expenditure on plant or structural improvements for conserving or conveying
water |
Subsection 75B(3B) |
|
Expenditure on certain kinds of plant and equipment for use in very large
development projects |
Subsections 82AB(1) and 82AT(1) |
|
Expenditure on study to evaluate the environmental impact of an income
producing project |
Paragraphs 82BB(1)(b), (c) and (d) |
|
Advance revenue expenditure |
Section 82KZM |
|
Expenditure incurred in relation to mining or quarrying
operations |
Sections 122D, 122DB, 122DD, 122DF, 122DG, 122JE and 122KA |
|
Expenditure incurred on exploration or prospecting for minerals obtainable
by prescribed mining operations |
Section 122J |
|
Expenditure incurred in transporting minerals or quarry materials |
Subsections 123B(1) and 123BE(1) |
|
Expenditure on prospecting and mining for petroleum |
Sections 124AD, 124ADB, 124ADD, 124ADE, 124ADF, 124ADG, 124AF, 124AH and
124AMA |
|
Expenditure on access roads to an area of timber operations |
Section 124F |
|
Expenditure on timber buildings used for timber milling business, if the
buildings are in a forest or adjacent to a timber milling or timber felling
area |
Subsection 124JA(1) |
|
Expenditure on acquiring a unit of industrial property to produce
assessable income |
Subsection 124M(1) |
|
Expenditure on Australian films |
Section 124ZAF |
|
Construction costs of building for short term traveller
accommodation |
Section 124ZC |
|
Construction costs of buildings, structural improvements etc. |
Subsections 124ZH(1), (2) and (2A) |
(2) Expenditure is excluded expenditure if:
(a) it was incurred in respect of an asset that has been disposed of by
the debtor to a person who was dealing at arm’s length with the debtor in
respect of the disposal; and
(b) the disposal occurred during the forgiveness year of income before the
forgiveness of any debt owed by the debtor, being a forgiveness that resulted in
a net forgiven amount; and
(c) no provision of this Act includes an amount in the debtor’s
assessable income, or allows a deduction to the debtor, as a result of the
disposal.
(3) Expenditure is excluded expenditure if the asset in
respect of which the expenditure was incurred was disposed of by the debtor, or
was lost or destroyed, on or before the commencement day.
(4) Expenditure is excluded expenditure to the extent (if
any) to which the expenditure was recouped on or before the commencement
day.
The residual forgiven amount is to be applied, to the maximum extent
possible, in reduction, in accordance with sections 245-150 and 245-155, of
deductible expenditures (if any).
(1) The debtor may choose:
(a) the order in which deductible expenditures are to be subject to
reduction; and
(b) the amount to be applied in reduction of each of those
expenditures;
provided that the residual forgiven amount is applied, to the maximum
extent possible, in reduction of deductible expenditures.
(2) If the debtor does not make a choice for the purposes of subsection
(1), the Commissioner may make the choice on behalf of the debtor in a
reasonable way.
(1) The following paragraphs apply in respect of the reduction of any
deductible expenditure if the deduction that would be allowable to the debtor,
apart from this Subdivision, in respect of the deductible expenditure is a
percentage, fraction or proportion of an amount (the base amount)
that is worked out without regard to any amount or amounts previously allowed as
a deduction or deductions in respect of the deductible expenditure:
(a) any amount that is to be applied in reduction of the deductible
expenditure is taken to reduce the base amount for the purpose of working out
the deduction in respect of the forgiveness year of income and later years of
income;
(b) the amount of the reduction is taken to have been a deduction allowed
to the debtor in respect of the deductible expenditure before the forgiveness
year of income for the purposes of the operation of any provision of this Act
that includes an amount in the debtor’s assessable income or allows a
deduction to the debtor:
(i) because of the disposal, loss or destruction of the asset in respect
of which the deductible expenditure was incurred; or
(ii) because of the recoupment of any of the expenditure; or
(iii) because use of the asset for a particular purpose has been otherwise
terminated, as the case may be;
(c) the total amount of the deductions allowed or allowable otherwise than
under paragraph (b) in respect of the deductible expenditure for all years of
income (including years of income before the forgiveness year of income) must
not exceed the base amount as reduced under paragraph (a).
(2) If the deduction that would be allowable to the debtor, apart from
this Subdivision, in respect of any deductible expenditure is a percentage,
fraction or proportion of an amount that is worked out after taking into account
any amount or amounts previously allowed as a deduction or deductions in respect
of the deductible expenditure, any amount to be applied in reduction of the
deductible expenditure is taken to have been a deduction allowed to the debtor
in respect of the deductible expenditure before the forgiveness year of
income.
If:
(a) an amount of deductible expenditure is recouped after the forgiveness
year of income; and
(b) as a result of the recoupment, this Act applies to disallow any
deduction previously allowed to the debtor in respect of the
expenditure;
an amount equal to the amount, or the sum of the amounts, applied under
this Subdivision in reduction of the deductible expenditure is included in the
debtor’s assessable income of the year of income in which the expenditure
is recouped.
(1) In sections 245-165 to 245-190:
excluded asset has the meaning given by section
245-170.
reducible asset means an asset (other than an excluded asset)
of the debtor at the beginning of the forgiveness year of income.
relevant cost base, in relation to an asset, means the cost
base, the indexed cost base, or the reduced cost base, of the asset.
residual forgiven amount means the total net forgiven amount
to the extent to which it has not been applied in making reductions of
deductible revenue losses, deductible net capital losses and deductible
expenditures.
(2) In sections 245-165 to 245-190, an expression that is used in Part
IIIA has the meaning given to that expression by that Part.
The following assets of a debtor are excluded assets:
(a) an asset acquired by the debtor before 20 September 1985;
(b) an asset disposed of by the debtor on or before the commencement
day;
(c) a non-listed personal-use asset;
(d) a dwelling that was the sole or principal residence of the debtor at
any time before the forgiveness year of income;
(e) goodwill;
(f) a right referred to in section 160ZZJ (a right to, or to any part of,
an allowance, annuity or capital amount payable out of an asset of a
superannuation fund or an approved deposit fund or a right to, or to a part of,
an asset of such a fund);
(g) an asset that, throughout the period before the forgiveness year when
it was owned by the debtor, constituted trading stock of the debtor for the
purposes of this Act;
(h) an asset:
(i) the cost of which is deductible expenditure in relation to the debtor
under section 245-140; and
(ii) as a result of the disposal of which an amount would be included in
the debtor’s assessable income or a deduction would be allowable to the
debtor;
(i) if the debtor is a non-resident at the beginning of the forgiveness
year of income—an asset that is not a taxable Australian asset.
The residual forgiven amount is to be applied, to the maximum extent
possible, in reduction, in accordance with sections 245-180 to 245-190, of the
relevant cost bases of reducible assets (if any).
(1) Subject to section 245-185, the debtor may choose:
(a) the reducible assets whose relevant cost bases are to be subject to
reduction; and
(b) the amount to be applied in reduction of the relevant cost base of
each of those assets;
provided that the residual forgiven amount is applied, to the maximum
extent possible, in reduction of the relevant cost bases of reducible
assets.
(2) If the debtor does not make a choice for the purposes of subsection
(1), the Commissioner may make the choice on behalf of the debtor in a
reasonable way.
(1) If a debtor’s reducible assets include investments in, or in
relation to, entities that are associates of the debtor, the relevant cost bases
of those investments are not subject to reduction under section 245-175 until
the residual forgiven amount has been applied, to the maximum extent possible,
in reduction of the relevant cost bases of reducible assets other than such
investments.
(2) In this section:
entity means a natural person, a partnership, a trustee of a
trust or a company.
investment includes:
(a) in respect of an entity that is a partnership—an interest as a
partner in a partnership; and
(b) in respect of an entity that is a trustee of a trust—a
beneficial interest under the trust; and
(c) in respect of an entity that is a company—a share in the
company; and
(d) in respect of any entity—a debt owed to the debtor by the
entity.
(1) Subject to subsection (3), if the debtor chooses to apply an amount in
reduction of the relevant cost bases of a particular asset, each relevant cost
base of the asset, as at any time on or after the beginning of the forgiveness
year of income, is taken to be reduced by that amount.
(2) The reduction by a particular amount of each of the relevant cost
bases of a particular asset is, for the purpose of working out the amount by
which the residual forgiven amount is applied in making the reduction, taken to
be a reduction in that residual forgiven amount by the particular amount (and
not by the sum of the amounts by which those cost bases are reduced).
(3) The maximum amount by which each of the relevant cost bases of an
asset may be reduced is the amount that, apart from sections 245-175 to 245-185,
would be the reduced cost base of the asset calculated as if:
(a) the asset had been disposed of on the first day of the forgiveness
year of income; or
(b) if, after the beginning of the forgiveness year of income, an event
occurred that would cause the reduced cost base of the asset to be
reduced—the asset had been disposed of on the day on which the event
occurred.
(1) If any part of the total net forgiven amount remains after the
application of that amount in making reductions under the preceding provisions
of this Subdivision, the remaining part is disregarded.
(2) This section has effect subject to section 245-215.
This Subdivision provides that the preceding Subdivisions apply to a
partnership in relation to debts owed by the partnership that are
forgiven.
However, if the total net forgiven amount in relation to a partnership is
not able to be fully applied under those provisions as they apply to the
partnership, the remainder is treated as being net forgiven amounts of debts of
the partners in proportion to their respective shares in the net income, or the
partnership loss, of the partnership of the forgiveness year of
income.
(1) This Subdivision does not apply to a corporate limited
partnership.
(2) This Division, other than this Subdivision, applies to a corporate
limited partnership as if the partnership were a company.
(3) In this section:
corporate limited partnership has the meaning given by
section 94D.
(1) Subdivisions 245-A to 245-D apply to a partnership in respect of the
partnership’s debts, and references in those Subdivisions to a debtor
include a reference to a partnership in respect of the partnership’s
debts.
(2) Subject to section 245-215, Subdivision 245-E applies to a partnership
in respect of the total net forgiven amount calculated in relation to the
partnership under Subdivisions 245-A to 245-D as they apply under subsection
(1).
(1) This section has effect in relation to a partnership irrespective of
any agreement between the partners as to the operation of this
section.
(2) This section applies if any part (the residual amount)
of the total net forgiven amount in relation to a partnership in respect of the
forgiveness year of income remains after the total net forgiven amount has been
applied in accordance with Subdivision 245-E.
(3) If there is a net income in relation to the partnership in respect of
the forgiveness year of income, each partner is taken to have had a debt
forgiven during the forgiveness year of income and there is taken to be, in
respect of the debt of each partner, a net forgiven amount worked out in
accordance with the following formula:
(4) If there is a partnership loss in relation to the partnership in
respect of the forgiveness year of income, each partner is taken to have had a
debt forgiven during the forgiveness year of income and there is taken to be, in
respect of the debt of each partner, a net forgiven amount worked out in
accordance with the following formula:
(5) In the formulas in subsections (3) and (4):
partner’s share of net income means the part of the net
income of the partnership of the forgiveness year of income that is included in
the partner’s assessable income.
partner’s share of partnership loss means the part of
the partnership loss that is allowable as a deduction to the partner.
net income means the net income of the partnership of the
forgiveness year of income.
partnership loss means the partnership loss of the
forgiveness year of income.
residual amount has the meaning given by subsection
(2).
(6) The total net forgiven amount of a partner for the forgiveness year of
income as worked out under subsection 245-105(1) includes the net forgiven
amount worked out in relation to the partner under this section.
This Subdivision applies in certain circumstances if, at the time when a
debt incurred by a company is forgiven, the company and another company or other
companies constituted a group of related companies.
The forgiven amount of the debt is treated in those circumstances as having
been used to generate amounts that would otherwise be taken into account in
reducing the taxable incomes of the debtor company and other company or
companies in the group.
(1) This Subdivision applies in respect of a debt (the relevant
debt) incurred by a company (the debtor company) if, and
only if:
(a) the relevant debt has been forgiven; and
(b) there is a net forgiven amount in respect of the relevant debt;
and
(c) the debtor company and another company or other companies constitute a
group of related companies in respect of the relevant debt.
(2) The debtor company and another company or other companies constitute a
group of related companies in respect of the relevant debt for the purposes of
this section if the companies concerned were under common ownership:
(a) at the time when the relevant debt was forgiven; and
(b) at any time on the last day of the year of income that
immediately preceded the forgiveness year of income in respect of the relevant
debt.
(3) If:
(a) the debtor company and another company were not under common ownership
at the times mentioned in subsection (2); and
(b) the 2 companies had been under common ownership at any time
within:
(i) the 2 years of income that immediately preceded the forgiveness year
of income in respect of the relevant debt; or
(ii) the part of the forgiveness year of income that occurred before the
relevant debt was forgiven; and
(c) a taxpayer who was a controller of the other company immediately
before, and immediately after, the 2 companies ceased to be under common
ownership was also:
(i) a controller of the other company at the time when the relevant debt
was forgiven; and
(ii) a controller of the debtor company at that time;
the other company is taken to be included in the group of related companies
referred to in subsection (2) in respect of the relevant debt.
(1) This section applies in relation to the relevant debt if, and only if,
any one or more of the non-debtor companies in the group of related companies in
respect of the relevant debt have deductible revenue losses for the purposes of
the application of this Division in relation to the forgiveness year of income
in respect of the relevant debt (the relevant year of
income).
(2) The net forgiven amount of the relevant debt (the disregarded
net forgiven amount) is disregarded for the purposes of this Division
other than this Subdivision.
(3) However, each company in the group that has deductible revenue losses
for the purposes mentioned in subsection (1) (including the debtor company if it
has deductible revenue losses for those purposes) is taken to have had a debt
forgiven during the relevant year of income and there is taken to be, in respect
of each such debt, a net forgiven amount worked out in accordance with the
following formula:
where:
company’s deductible revenue losses means the total of
the company’s deductible revenue losses for the purposes of the
application of this Division in relation to the relevant year of
income.
total deductible revenue losses means the total of the
deductible revenue losses of all the companies in the group of related companies
for the purposes of the application of this Division in relation to the relevant
year of income.
(1) This section applies in relation to the relevant debt if, and only if,
for the purposes of the application of this Division in relation to the
forgiveness year of income in respect of the relevant debt (the relevant
year of income):
(a) none of the companies in the group of related companies in respect of
the relevant debt have deductible revenue losses; but
(b) any one or more of the non-debtor companies in the group of related
companies in respect of the relevant debt have deductible net capital
losses.
(2) The net forgiven amount of the relevant debt (the disregarded
net forgiven amount) is disregarded for the purposes of this Division
other than this Subdivision.
(3) However, each company in the group that has deductible net capital
losses for the purposes mentioned in subsection (1) (including the debtor
company if it has deductible net capital losses for those purposes) is taken to
have had a debt forgiven during the relevant year of income and there is taken
to be, in respect of each such debt, a net forgiven amount worked out in
accordance with the following formula:
where:
company’s deductible net capital losses means the total
of the company’s deductible net capital losses for the purposes of the
application of this Division in relation to the relevant year of
income.
total deductible net capital losses means the total of the
deductible net capital losses of all the companies in the group of related
companies for the purposes of the application of this Division in relation to
the relevant year of income.
If neither section 245-230 nor 245-235 applies in respect of the relevant debt, this Subdivision does not affect the application of the preceding Subdivisions in relation to the n
