Income Tax Assessment Act 1997 (Cth)

Income Tax Assessment Act 1997 No. 38, 1997 Compilation No. 256 Compilation date: 1 January 2025 Includes amendments: Act No. 136, 2024 and Act No. 138, 2024 This compilation is in 12 volumes Volume 1: sections 1‑1 to 36‑55 Volume 2: sections 40‑1 to 67‑30 Volume 3: sections 70‑1 to 121‑35 Volume 4: sections 122‑1 to 197‑85 Volume 5: sections 200‑1 to 253‑15 Volume 6: sections 275‑1 to 313‑85 Volume 7: sections 315‑1 to 420‑70 Volume 8: sections 615‑1 to 721‑40 Volume 9: sections 723‑1 to 880‑205 Volume 10: sections 900‑1 to 995‑1 Volume 11: Endnotes 1 to 3 Volume 12: Endnotes 4 and 5 Each volume has its own contents About this compilation This compilation This is a compilation of the Income Tax Assessment Act 1997 that shows the text of the law as amended and in force on 1 January 2025 (the compilation date). The notes at the end of this compilation (the endnotes) include information about amending laws and the amendment history of provisions of the compiled law. Uncommenced amendments The effect of uncommenced amendments is not shown in the text of the compiled law. Any uncommenced amendments affecting the law are accessible on the Register (www.legislation.gov.au). The details of amendments made up to, but not commenced at, the compilation date are underlined in the endnotes. For more information on any uncommenced amendments, see the Register for the compiled law. Application, saving and transitional provisions for provisions and amendments If the operation of a provision or amendment of the compiled law is affected by an application, saving or transitional provision that is not included in this compilation, details are included in the endnotes. Editorial changes For more information about any editorial changes made in this compilation, see the endnotes. Modifications If the compiled law is modified by another law, the compiled law operates as modified but the modification does not amend the text of the law. Accordingly, this compilation does not show the text of the compiled law as modified. For more information on any modifications, see the Register for the compiled law. Self‑repealing provisions If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes. Contents Chapter 1—Introduction and core provisions Part 1‑1—Preliminary Division 1—Preliminary 1‑1 Short title 1‑2 Commencement 1‑3 Differences in style not to affect meaning 1‑4 Application 1‑7 Administration of this Act Part 1‑2—A Guide to this Act Division 2—How to use this Act Subdivision 2‑A—How to find your way around 2‑1 The design Subdivision 2‑B—How the Act is arranged 2‑5 The pyramid Subdivision 2‑C—How to identify defined terms and find the definitions 2‑10 When defined terms are identified 2‑15 When terms are not identified 2‑20 Identifying the defined term in a definition Subdivision 2‑D—The numbering system 2‑25 Purposes 2‑30 Gaps in the numbering Subdivision 2‑E—Status of Guides and other non‑operative material 2‑35 Non‑operative material 2‑40 Guides 2‑45 Other material Division 3—What this Act is about 3‑5 Annual income tax 3‑10 Your other obligations as a taxpayer 3‑15 Your obligations other than as a taxpayer Part 1‑3—Core provisions Division 4—How to work out the income tax payable on your taxable income 4‑1 Who must pay income tax 4‑5 Meaning of you 4‑10 How to work out how much income tax you must pay 4‑15 How to work out your taxable income 4‑25 Special provisions for working out your basic income tax liability Division 5—How to work out when to pay your income tax Guide to Division 5 5‑1 What this Division is about Subdivision 5‑A—How to work out when to pay your income tax 5‑5 When income tax is payable 5‑10 When shortfall interest charge is payable 5‑15 General interest charge payable on unpaid income tax or shortfall interest charge Division 6—Assessable income and exempt income Guide to Division 6 6‑1 Diagram showing relationships among concepts in this Division Operative provisions 6‑5 Income according to ordinary concepts (ordinary income) 6‑10 Other assessable income (statutory income) 6‑15 What is not assessable income 6‑20 Exempt income 6‑23 Non‑assessable non‑exempt income 6‑25 Relationships among various rules about ordinary income Division 8—Deductions 8‑1 General deductions 8‑5 Specific deductions 8‑10 No double deductions Part 1‑4—Checklists of what is covered by concepts used in the core provisions Division 9—Entities that must pay income tax 9‑1A Effect of this Division 9‑1 List of entities 9‑5 Entities that work out their income tax by reference to something other than taxable income Division 10—Particular kinds of assessable income 10‑1 Effect of this Division 10‑5 List of provisions about assessable income Division 11—Particular kinds of non‑assessable income Subdivision 11‑A—Lists of classes of exempt income 11‑1A Effect of this Subdivision 11‑1 Overview 11‑5 Entities that are exempt, no matter what kind of ordinary or statutory income they have 11‑15 Ordinary or statutory income which is exempt Subdivision 11‑B—Particular kinds of non‑assessable non‑exempt income 11‑50 Effect of this Subdivision 11‑55 List of non‑assessable non‑exempt income provisions Division 12—Particular kinds of deductions 12‑1 Effect of this Division 12‑5 List of provisions about deductions Division 13—Tax offsets 13‑1A Effect of this Division 13‑1 List of tax offsets Chapter 2—Liability rules of general application Part 2‑1—Assessable income Division 15—Some items of assessable income Guide to Division 15 15‑1 What this Division is about Operative provisions 15‑2 Allowances and other things provided in respect of employment or services 15‑3 Return to work payments 15‑5 Accrued leave transfer payments 15‑10 Bounties and subsidies 15‑15 Profit‑making undertaking or plan 15‑20 Royalties 15‑22 Payments made to members of a copyright collecting society 15‑23 Payments of resale royalties by resale royalty collecting society 15‑25 Amount received for lease obligation to repair 15‑30 Insurance or indemnity for loss of assessable income 15‑35 Interest on overpayments and early payments of tax 15‑40 Providing mining, quarrying or prospecting information or geothermal exploration information 15‑45 Amounts paid under forestry agreements 15‑46 Amounts paid under forestry managed investment schemes 15‑50 Work in progress amounts 15‑55 Certain amounts paid under funeral policy 15‑60 Certain amounts paid under scholarship plan 15‑70 Reimbursed car expenses 15‑75 Bonuses 15‑80 Franked distributions entitled to a foreign income tax deduction—Additional Tier 1 capital exception Division 17—Effect of GST etc. on assessable income Guide to Division 17 17‑1 What this Division is about 17‑5 GST and increasing adjustments 17‑10 Certain decreasing adjustments 17‑15 Elements in calculation of amounts 17‑20 GST groups and GST joint ventures 17‑30 Special credits because of indirect tax transition 17‑35 Certain sections not to apply to certain assets or expenditure Division 20—Amounts included to reverse the effect of past deductions Guide to Division 20 20‑1 What this Division is about 20‑5 Other provisions that reverse the effect of deductions Subdivision 20‑A—Insurance, indemnity or other recoupment for deductible expenses Guide to Subdivision 20‑A 20‑10 What this Subdivision is about 20‑15 How to use this Subdivision What is an assessable recoupment? 20‑20 Assessable recoupments 20‑25 What is recoupment? 20‑30 Tables of deductions for which recoupments are assessable How much is included in your assessable income? 20‑35 If the expense is deductible in a single income year 20‑40 If the expense is deductible over 2 or more income years 20‑45 Effect of balancing charge 20‑50 If the expense is only partially deductible 20‑55 Meaning of previous recoupment law What if you can deduct a loss or outgoing incurred by another entity? 20‑60 If you are the only entity that can deduct an amount for the loss or outgoing 20‑65 If 2 or more entities can deduct amounts for the loss or outgoing Subdivision 20‑B—Disposal of a car for which lease payments have been deducted Guide to Subdivision 20‑B 20‑100 What this Subdivision is about 20‑105 Map of this Subdivision The usual case 20‑110 Disposal of a leased car for profit 20‑115 Working out the profit on the disposal 20‑120 Meaning of notional depreciation The associate case 20‑125 Disposal of a leased car for profit Successive leases 20‑130 Successive leases Previous disposals of the car 20‑135 No amount included if earlier disposal for market value 20‑140 Reducing the amount to be included if there has been an earlier disposal Miscellaneous rules 20‑145 No amount included if you inherited the car 20‑150 Reducing the amount to be included if another provision requires you to include an amount for the disposal 20‑155 Exception for particular cars taken on hire 20‑157 Exception for small business entities Disposals of interests in a car: special rules apply 20‑160 Disposal of an interest in a car Part 2‑5—Rules about deductibility of particular kinds of amounts Division 25—Some amounts you can deduct Guide to Division 25 25‑1 What this Division is about Operative provisions 25‑5 Tax‑related expenses 25‑10 Repairs 25‑15 Amount paid for lease obligation to repair 25‑20 Lease document expenses 25‑25 Borrowing expenses 25‑30 Expenses of discharging a mortgage 25‑35 Bad debts 25‑40 Loss from profit‑making undertaking or plan 25‑45 Loss by theft etc. 25‑47 Misappropriation where a balancing adjustment event occurs 25‑50 Payments of pensions, gratuities or retiring allowances 25‑55 Payments to associations 25‑60 Parliament election expenses 25‑65 Local government election expenses 25‑70 Deduction for election expenses does not extend to entertainment 25‑75 Rates and land taxes on premises used to produce mutual receipts 25‑85 Certain returns in respect of debt interests 25‑90 Deduction relating to foreign non‑assessable non‑exempt income 25‑95 Deduction for work in progress amounts 25‑100 Travel between workplaces 25‑110 Capital expenditure to terminate lease etc. 25‑115 Deduction for payment of rent from land investment by operating entity to asset entity in relation to approved economic infrastructure facility 25‑120 Transitional—deduction for payment of rent from land investment by operating entity to asset entity 25‑125 COVID‑19 tests Division 26—Some amounts you cannot deduct, or cannot deduct in full Guide to Division 26 26‑1 What this Division is about Operative provisions 26‑5 Penalties 26‑10 Leave payments 26‑15 Franchise fees windfall tax 26‑17 Commonwealth places windfall tax 26‑19 Rebatable benefits 26‑20 Assistance to students 26‑22 Political contributions and gifts 26‑25 Interest or royalty 26‑25A Payments to employees—labour mobility programs 26‑26 Non‑share distributions and dividends 26‑30 Relative's travel expenses 26‑31 Travel related to use of residential premises as residential accommodation 26‑35 Reducing deductions for amounts paid to related entities 26‑40 Maintaining your family 26‑45 Recreational club expenses 26‑47 Non‑business boating activities 26‑50 Expenses for a leisure facility 26‑52 Bribes to foreign public officials 26‑53 Bribes to public officials 26‑54 Expenditure relating to illegal activities 26‑55 Limit on deductions 26‑60 Superannuation contributions surcharge 26‑68 Loss from disposal of eligible venture capital investments 26‑70 Loss from disposal of venture capital equity 26‑75 Excess non‑concessional contributions tax cannot be deducted 26‑80 Financing costs on loans to pay superannuation contribution 26‑85 Borrowing costs on loans to pay life insurance premiums 26‑90 Superannuation supervisory levy 26‑95 Superannuation guarantee charge 26‑96 Laminaria and Corallina decommissioning levy cannot be deducted 26‑97 National Disability Insurance Scheme expenditure 26‑98 Division 293 tax cannot be deducted 26‑99 Excess transfer balance tax cannot be deducted 26‑99B Build to rent development misuse tax cannot be deducted 26‑99C Australian IIR/UTPR tax and Australian DMT tax cannot be deducted 26‑100 Expenditure attributable to water infrastructure improvement payments 26‑102 Expenses associated with holding vacant land 26‑105 Non‑compliant payments for work and services Division 27—Effect of input tax credits etc. on deductions Guide to Division 27 27‑1 What this Division is about Subdivision 27‑A—General 27‑5 Input tax credits and decreasing adjustments 27‑10 Certain increasing adjustments 27‑15 GST payments 27‑20 Elements in calculation of amounts 27‑25 GST groups and GST joint ventures 27‑35 Certain sections not to apply to certain assets or expenditure Subdivision 27‑B—Effect of input tax credits etc. on capital allowances 27‑80 Cost or opening adjustable value of depreciating assets reduced for input tax credits 27‑85 Cost or opening adjustable value of depreciating assets reduced: decreasing adjustments 27‑87 Certain decreasing adjustments included in assessable income 27‑90 Cost or opening adjustable value of depreciating assets increased: increasing adjustments 27‑92 Certain increasing adjustments can be deducted 27‑95 Balancing adjustment events 27‑100 Pooling 27‑105 Other Division 40 expenditure 27‑110 Input tax credit etc. relating to 2 or more things Division 28—Car expenses Guide to Division 28 28‑1 What this Division is about 28‑5 Map of this Division Subdivision 28‑A—Deductions for car expenses 28‑10 Application of Division 28 28‑12 Car expenses 28‑13 Meaning of car expense Subdivision 28‑B—Choosing which method to use Guide to Subdivision 28‑B 28‑14 What this Subdivision is about 28‑15 Choosing between the 2 methods Operative provision 28‑20 Rules governing choice of method Subdivision 28‑C—The "cents per kilometre" method 28‑25 How to calculate your deduction 28‑30 Capital allowances 28‑35 Substantiation Subdivision 28‑F—The "log book" method 28‑90 How to calculate your deduction 28‑95 Eligibility 28‑100 Substantiation Subdivision 28‑G—Keeping a log book Guide to Subdivision 28‑G 28‑105 What this Subdivision is about 28‑110 Steps for keeping a log book Operative provisions 28‑115 Income years for which you need to keep a log book 28‑120 Choosing the 12 week period for a log book 28‑125 How to keep a log book 28‑130 Replacing one car with another Subdivision 28‑H—Odometer records for a period Guide to Subdivision 28‑H 28‑135 What this Subdivision is about Operative provision 28‑140 How to keep odometer records for a car for a period Subdivision 28‑I—Retaining the log book and odometer records 28‑150 Retaining the log book for the retention period 28‑155 Retaining odometer records Subdivision 28‑J—Situations where you cannot use, or do not need to use, one of the 2 methods Guide to Subdivision 28‑J 28‑160 What this Subdivision is about Operative provisions 28‑165 Exception for particular cars taken on hire 28‑170 Exception for particular cars used in particular ways 28‑175 Further miscellaneous exceptions 28‑180 Car expenses related to award transport payments 28‑185 Application of Subdivision 28‑J to recipients and payers of certain withholding payments Division 30—Gifts or contributions Guide to Division 30 30‑1 What this Division is about 30‑5 How to find your way around this Division 30‑10 Index Subdivision 30‑A—Deductions for gifts or contributions 30‑15 Table of gifts or contributions that you can deduct 30‑17 Requirements for certain recipients Subdivision 30‑B—Tables of recipients for deductible gifts Health 30‑20 Health Education 30‑25 Education 30‑30 Gifts that must be for certain purposes 30‑35 Rural schools hostel buildings 30‑37 Scholarship etc. funds Research 30‑40 Research Welfare and rights 30‑45 Welfare and rights 30‑45A Australian disaster relief funds—declarations by Minister 30‑46 Australian disaster relief funds—declarations under State and Territory law Defence 30‑50 Defence Environment 30‑55 The environment 30‑60 Gifts to a National Parks body or conservation body must satisfy certain requirements Industry, trade and design 30‑65 Industry, trade and design The family 30‑70 The family 30‑75 Marriage education organisations must be approved International affairs 30‑80 International affairs 30‑85 Developing country relief funds 30‑86 Developed country disaster relief funds Sports and recreation 30‑90 Sports and recreation Philanthropic trusts 30‑95 Philanthropic trusts Cultural organisations 30‑100 Cultural organisations Fire and emergency services 30‑102 Fire and emergency services Other recipients 30‑105 Other recipients 30‑110 Community charities Subdivision 30‑BA—Endorsement of deductible gift recipients Guide to Subdivision 30‑BA 30‑115 What this Subdivision is about Endorsement as a deductible gift recipient 30‑120 Endorsement by Commissioner 30‑125 Entitlement to endorsement 30‑130 Maintaining a gift fund Government entities treated like entities 30‑180 How this Subdivision applies to government entities Subdivision 30‑C—Rules applying to particular gifts of property Valuation requirements 30‑200 Getting written valuations 30‑205 Proceeds of the sale would have been assessable 30‑210 Approved valuers 30‑212 Valuations by the Commissioner Working out the amount you can deduct for a gift of property 30‑215 How much you can deduct 30‑220 Reducing the amount you can deduct Joint ownership of property 30‑225 Gift of property by joint owners Subdivision 30‑CA—Administrative requirements relating to ABNs Guide to Subdivision 30‑CA 30‑226 What this Subdivision is about Requirements 30‑227 Entities to which this Subdivision applies 30‑228 Content of receipt for gift or contribution 30‑229 Australian Business Register must show deductibility of gifts to deductible gift recipient Subdivision 30‑DA—Donations to political parties and independent candidates and members Guide to Subdivision 30‑DA 30‑241 What this Subdivision is about Operative provisions 30‑242 Deduction for political contributions and gifts 30‑243 Amount of the deduction 30‑244 When an individual is an independent candidate 30‑245 When an individual is an independent member Subdivision 30‑DB—Spreading certain gift and covenant deductions over up to 5 income years Guide to Subdivision 30‑DB 30‑246 What this Subdivision is about Operative provisions 30‑247 Gifts and covenants for which elections can be made 30‑248 Making an election 30‑249 Effect of election 30‑249A Requirements—environmental property gifts 30‑249B Requirements—heritage property gifts 30‑249D Requirements—conservation covenants Subdivision 30‑G—Index to this Division 30‑315 Index 30‑320 Effect of this Subdivision Division 31—Conservation covenants Guide to Division 31 31‑1 What this Division is about Operative provisions 31‑5 Deduction for entering into conservation covenant 31‑10 Requirements for fund, authority or institution 31‑15 Valuations by the Commissioner Division 32—Entertainment expenses Guide to Division 32 32‑1 What this Division is about Subdivision 32‑A—No deduction for entertainment expenses 32‑5 No deduction for entertainment expenses 32‑10 Meaning of entertainment 32‑15 No deduction for property used for providing entertainment Subdivision 32‑B—Exceptions 32‑20 The main exception—fringe benefits 32‑25 The tables set out the other exceptions 32‑30 Employer expenses 32‑35 Seminar expenses 32‑40 Entertainment industry expenses 32‑45 Promotion and advertising expenses 32‑50 Other expenses Subdivision 32‑C—Definitions relevant to the exceptions 32‑55 In‑house dining facility (employer expenses table items 1.1 and 1.2) 32‑60 Dining facility (employer expenses table item 1.3) 32‑65 Seminars (seminar expenses table item 2.1) Subdivision 32‑D—In‑house dining facilities (employer expenses table item 1.2) 32‑70 $30 is assessable for each meal provided to non‑employee in an in‑house dining facility Subdivision 32‑E—Anti‑avoidance 32‑75 Commissioner may treat you as having incurred entertainment expense Subdivision 32‑F—Special rules for companies and partnerships 32‑80 Company directors 32‑85 Directors, employees and property of wholly‑owned group company 32‑90 Partnerships Division 34—Non‑compulsory uniforms Guide to Division 34 34‑1 What this Division is about 34‑3 What you need to read Subdivision 34‑A—Application of Division 34 34‑5 This Division applies to employees and others 34‑7 This Division applies to employers and others Subdivision 34‑B—Deduction for your non‑compulsory uniform 34‑10 What you can deduct 34‑15 What is a non‑compulsory uniform? 34‑20 What are occupation specific clothing and protective clothing? Subdivision 34‑C—Registering the design of a non‑compulsory uniform 34‑25 Application to register the design 34‑30 Industry Secretary's decision on application 34‑33 Written notice of decision 34‑35 When uniform becomes registered Subdivision 34‑D—Appeals from Industry Secretary's decision 34‑40 Review of decisions by the Administrative Review Tribunal Subdivision 34‑E—The Register of Approved Occupational Clothing 34‑45 Keeping of the Register 34‑50 Changes to the Register Subdivision 34‑F—Approved occupational clothing guidelines 34‑55 Approved occupational clothing guidelines Subdivision 34‑G—The Industry Secretary 34‑60 Industry Secretary to give Commissioner information about entries 34‑65 Delegation of powers by Industry Secretary Division 35—Deferral of losses from non‑commercial business activities Guide to Division 35 35‑1 What this Division is about Operative provisions 35‑5 Object 35‑10 Deferral of deductions from non‑commercial business activities 35‑15 Modification if you have exempt income 35‑20 Modification if you become bankrupt 35‑25 Application of Division to certain partnerships 35‑30 Assessable income test 35‑35 Profits test 35‑40 Real property test 35‑45 Other assets test 35‑50 Apportionment 35‑55 Commissioner's discretion Division 36—Tax losses of earlier income years Guide to Division 36 36‑1 What this Division is about Subdivision 36‑A—Deductions for tax losses of earlier income years 36‑10 How to calculate a tax loss for an income year 36‑15 How to deduct tax losses of entities other than corporate tax entities 36‑17 How to deduct tax losses of corporate tax entities 36‑20 Net exempt income 36‑25 Special rules about tax losses Subdivision 36‑B—Effect of you becoming bankrupt Guide to Subdivision 36‑B 36‑30 What this Subdivision is about Operative provisions 36‑35 No deduction for tax loss incurred before bankruptcy 36‑40 Deduction for amounts paid for debts incurred before bankruptcy 36‑45 Limit on deductions for amounts paid Subdivision 36‑C—Excess franking offsets Guide to Subdivision 36‑C 36‑50 What this Subdivision is about Operative provision 36‑55 Converting excess franking offsets into tax loss An Act about income tax and related matters Chapter 1—Introduction and core provisions Part 1‑1—Preliminary Division 1—Preliminary Table of sections 1‑1 Short title 1‑2 Commencement 1‑3 Differences in style not to affect meaning 1‑4 Application 1‑7 Administration of this Act 1‑1 Short title This Act may be cited as the Income Tax Assessment Act 1997. 1‑2 Commencement This Act commences on 1 July 1997. 1‑3 Differences in style not to affect meaning (1) This Act contains provisions of the Income Tax Assessment Act 1936 in a rewritten form. (2) If: (a) that Act expressed an idea in a particular form of words; and (b) this Act appears to have expressed the same idea in a different form of words in order to use a clearer or simpler style; the ideas are not to be taken to be different just because different forms of words were used. Note: A public or private ruling about a provision of the Income Tax Assessment Act 1936 is taken also to be a ruling about the corresponding provision of this Act, so far as the 2 provisions express the same ideas: see section 357‑85 in Schedule 1 to the Taxation Administration Act 1953. 1‑4 Application This Act extends to every external Territory referred to in the definition of Australia. 1‑7 Administration of this Act The Commissioner has the general administration of this Act. Note: An effect of this provision is that people who acquire information under this Act are subject to the confidentiality obligations and exceptions in Division 355 in Schedule 1 to the Taxation Administration Act 1953. Part 1‑2—A Guide to this Act Division 2—How to use this Act Table of Subdivisions 2‑A How to find your way around 2‑B How the Act is arranged 2‑C How to identify defined terms and find the definitions 2‑D The numbering system 2‑E Status of Guides and other non‑operative material Subdivision 2‑A—How to find your way around 2‑1 The design This Act is designed to help you identify accurately and quickly the provisions that are relevant to your purpose in reading the income tax law. The Act contains tables, diagrams and signposts to help you navigate your way. You can start at Division 3 (What this Act is about) and follow the signposts as far into the Act as you need to go. You may also encounter signposts to several areas of the law that are relevant to you. Each one should be followed. Sometimes they will lead down through several levels of detail. At each successive level, the rules are structured in a similar way. They will often be preceded by a Guide to the rules at that level. The rules themselves will usually deal first with the general or most common case and then with the more particular or special cases. Subdivision 2‑B—How the Act is arranged 2‑5 The pyramid This Act is arranged in a way that reflects the principle of moving from the general case to the particular. In this respect, the conceptual structure of the Act is something like a pyramid. The pyramid shape illustrates the way the income tax law is organised, moving down from the central or core provisions at the top of the pyramid, to general rules of wide application and then to the more specialised topics. Note: The Taxation Administration Act 1953 contains the provisions on collection and recovery of tax and provisions on administration. Subdivision 2‑C—How to identify defined terms and find the definitions Table of sections 2‑10 When defined terms are identified 2‑15 When terms are not identified 2‑20 Identifying the defined term in a definition 2‑10 When defined terms are identified (1) Many of the terms used in the income tax law are defined. (2) Most defined terms in this Act are identified by an asterisk appearing at the start of the term: as in "*business". The footnote that goes with the asterisk contains a signpost to the Dictionary definitions starting at section 995‑1. 2‑15 When terms are not identified (1) Once a defined term has been identified by an asterisk, later occurrences of the term in the same subsection are not usually asterisked. (2) Terms are not asterisked in the non‑operative material contained in this Act. Note: The non‑operative material is described in Subdivision 2‑E. (3) The following basic terms used throughout the Act are not identified with an asterisk. They fall into 2 groups: Key participants in the income tax system Item This term: is defined in: 1. Australian resident section 995‑1 2. Commissioner section 995‑1 3. company section 995‑1 4. entity section 960‑100 4A. foreign resident section 995‑1 5. individual section 995‑1 6. partnership section 995‑1 7. person section 995‑1 8. trustee section 995‑1 9. you section 4‑5 Core concepts Item This term: is defined in: 1. amount section 995‑1 2. assessable income Division 6 3. assessment section 995‑1 3A. Australia Subdivision 960‑T 4. deduct, deduction Division 8 5. income tax section 995‑1 6. income year section 995‑1 7. taxable income section 4‑15 8. this Act section 995‑1 2‑20 Identifying the defined term in a definition Within a definition, the defined term is identified by bold italics. Subdivision 2‑D—The numbering system Table of sections 2‑25 Purposes 2‑30 Gaps in the numbering 2‑25 Purposes Two main purposes of the numbering system in this Act are: * To indicate the relationship between units at different levels. For example, the number of Part 2‑15 indicates that the Part is in Chapter 2. Similarly, the number of section 165‑70 indicates that the section is in Division 165. * To allow for future expansion of the Act. The main technique here is leaving gaps between numbers. 2‑30 Gaps in the numbering There are gaps in the numbering system to allow for the insertion of new Divisions and sections. Subdivision 2‑E—Status of Guides and other non‑operative material Table of sections 2‑35 Non‑operative material 2‑40 Guides 2‑45 Other material 2‑35 Non‑operative material In addition to the operative provisions themselves, this Act contains other material to help you identify accurately and quickly the provisions that are relevant to you and to help you understand them. This other material falls into 2 main categories. 2‑40 Guides The first is the "Guides". A Guide consists of sections under a heading indicating that what follows is a Guide to a particular Subdivision, Division etc. Guides form part of this Act but are kept separate from the operative provisions. In interpreting an operative provision, a Guide may only be considered for limited purposes. These are set out in section 950‑150. 2‑45 Other material The other category consists of material such as notes and examples. These also form part of the Act. They are distinguished by type size from the operative provisions, but are not kept separate from them. Division 3—What this Act is about Table of sections 3‑5 Annual income tax 3‑10 Your other obligations as a taxpayer 3‑15 Your obligations other than as a taxpayer 3‑5 Annual income tax (1) Income tax is payable for each year by each individual and company, and by some other entities. Note 1: Individuals who are Australian residents, and some trustees, are also liable to pay Medicare levy for each year. See the Medicare Levy Act 1986 and Part VIIB of the Income Tax Assessment Act 1936. Note 2: Income tax is imposed by the Income Tax Act 1986 and the other Acts referred to in the definition of income tax in section 995‑1. (2) Most entities have to pay instalments of income tax before the income tax they actually have to pay can be worked out. (3) This Act answers these questions: 1. What instalments of income tax do you have to pay? When and how do you pay them? See Schedule 1 to the Taxation Administration Act 1953. 2. How do you work out how much income tax you must pay? See Division 4, starting at section 4‑1. 3. What happens if your income tax is more than the instalments you have paid? When and how must you pay the rest? See Division 5 of this Act and Part 4‑15 in Schedule 1 to the Taxation Administration Act 1953. 4. What happens if your income tax is less than the instalments you have paid? How do you get a refund? See Division 3A of Part IIB of the Taxation Administration Act 1953. 5. What are your other obligations as a taxpayer, besides paying instalments and the rest of your income tax? See section 3‑10. 6. Do you have any other obligations under the income tax law? See section 3‑15. 7. If a dispute between you and the Commissioner of Taxation cannot be settled by agreement, what procedures for objection, review and appeal are available? See Part IVC (sections 14ZL to 14ZZS) of the Taxation Administration Act 1953. 3‑10 Your other obligations as a taxpayer (1) Besides paying instalments and the rest of your income tax, your main obligations as a taxpayer are: (a) to keep records and provide information as required by: * the Income Tax Assessment Act 1936; and * Division 900 (which sets out substantiation rules) of this Act; and (b) to lodge income tax returns as required by: * the Income Tax Assessment Act 1936. Tax file numbers (2) Under Part VA of the Income Tax Assessment Act 1936, a tax file number can be issued to you. You are not obliged to apply for a tax file number. However, if you do not quote one in certain situations: * you may become liable for instalments of income tax that would not otherwise have been payable; * the amount of certain of your instalments of income tax may be increased. 3‑15 Your obligations other than as a taxpayer Your main obligations under the income tax law, other t