Commonwealth: 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 Self‑repealing provisions If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes.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 than as a taxpayer are: * in certain situations, to deduct from money you owe to another person, and to remit to the Commissioner, instalments of income tax payable by that person. See Part 4‑5 (Collection of income tax instalments), starting at section 750‑1. Part 1‑3—Core provisions Division 4—How to work out the income tax payable on your taxable income Table of sections 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 4‑1 Who must pay income tax Income tax is payable by each individual and company, and by some other entities. Note: The actual amount of income tax payable may be nil. For a list of the entities that must pay income tax, see Division 9, starting at section 9‑1. 4‑5 Meaning of you If a provision of this Act uses the expression you, it applies to entities generally, unless its application is expressly limited. Note 1: The expression you is not used in provisions that apply only to entities that are not individuals. Note 2: For circumstances in which the identity of an entity that is a managed investment scheme for the purposes of the Corporations Act 2001 is not affected by changes to the scheme, see Subdivision 960‑E of the Income Tax (Transitional Provisions) Act 1997. 4‑10 How to work out how much income tax you must pay (1) You must pay income tax for each *financial year. (2) Your income tax is worked out by reference to your taxable income for the income year. The income year is the same as the *financial year, except in these cases: (a) for a company, the income year is the previous financial year; (b) if you have an accounting period that is not the same as the financial year, each such accounting period or, for a company, each previous accounting period is an income year. Note 1: The Commissioner can allow you to adopt an accounting period ending on a day other than 30 June. See section 18 of the Income Tax Assessment Act 1936. Note 2: An accounting period ends, and a new accounting period starts, when a partnership becomes, or ceases to be, a VCLP, an ESVCLP, an AFOF or a VCMP. See section 18A of the Income Tax Assessment Act 1936. (3) Work out your income tax for the *financial year as follows: Method statement Step 1. Work out your taxable income for the income year. To do this, see section 4‑15. Step 2. Work out your basic income tax liability on your taxable income using: (a) the income tax rate or rates that apply to you for the income year; and (b) any special provisions that apply to working out that liability. See the Income Tax Rates Act 1986 and section 4‑25. Step 3. Work out your tax offsets for the income year. A tax offset reduces the amount of income tax you have to pay. For the list of tax offsets, see section 13‑1. Step 4. Subtract your *tax offsets from your basic income tax liability. The result is how much income tax you owe for the *financial year. Note 1: Division 63 explains what happens if your tax offsets exceed your basic income tax liability. How the excess is treated depends on the type of tax offset. Note 2: Section 4‑11 of the Income Tax (Transitional Provisions) Act 1997 (which is about the temporary budget repair levy) may increase the amount of income tax worked out under this section. Income tax worked out on another basis (4) For some entities, some or all of their income tax for the *financial year is worked out by reference to something other than taxable income for the income year. See section 9‑5. 4‑15 How to work out your taxable income (1) Work out your taxable income for the income year like this: Method statement Step 1. Add up all your assessable income for the income year. To find out about your assessable income, see Division 6. Step 2. Add up your deductions for the income year. To find out what you can deduct, see Division 8. Step 3. Subtract your deductions from your assessable income (unless they exceed it). The result is your taxable income. (If the deductions equal or exceed the assessable income, you don't have a taxable income.) Note: If the deductions exceed the assessable income, you may have a tax loss which you may be able to utilise in that or a later income year: see Division 36. (2) There are cases where taxable income is worked out in a special way: Item For this case ... See: 1. A company does not maintain continuity of ownership and control during the income year and does not satisfy the business continuity test Subdivision 165‑B 1B. An entity is a *member of a *consolidated group at any time in the income year Part 3‑90 2. A company becomes a PDF (pooled development fund) during the income year, and the PDF component for the income year is a nil amount section 124ZTA of the Income Tax Assessment Act 1936 3. A shipowner or charterer: section 129 of the Income Tax Assessment Act 1936  has its principal place of business outside Australia; and  carries passengers, freight or mail shipped in Australia 4. An insurer who is a foreign resident enters into insurance contracts connected with Australia sections 142 and 143 of the Income Tax Assessment Act 1936 5. The Commissioner makes a default or special assessment of taxable income sections 167 and 168 of the Income Tax Assessment Act 1936 6. The Commissioner makes a determination of the amount of taxable income to prevent double taxation in certain treaty cases section 24 of the International Tax Agreements Act 1953 Note: A life insurance company can have a taxable income of the complying superannuation class and/or a taxable income of the ordinary class for the purposes of working out its income tax for an income year: see Subdivision 320‑D. 4‑25 Special provisions for working out your basic income tax liability Subsection 392‑35(3) may increase your basic income tax liability beyond the liability worked out simply by applying the income tax rates to your taxable income. Note: Subsection 392‑35(3) increases some primary producers' tax liability by requiring them to pay extra income tax on their averaging components worked out under Subdivision 392‑C. Division 5—How to work out when to pay your income tax Table of Subdivisions Guide to Division 5 5‑A How to work out when to pay your income tax Guide to Division 5 5‑1 What this Division is about If your assessed income tax liability exceeds the credits available to you under the PAYG system, this Division explains when you must pay the excess to the Commissioner. If your assessment is amended so that you must pay income tax, or pay more income tax than under the previous assessment, this Division explains: (a) when you must pay the additional tax; and (b) when any associated interest charges must be paid. Note: For provisions about the collection and recovery of income tax and other tax‑related liabilities, see Part 4‑15 in Schedule 1 to the Taxation Administration Act 1953. Subdivision 5‑A—How to work out when to pay your income tax Table of sections 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 5‑5 When income tax is payable Scope (1) This section tells you when income tax you must pay for a *financial year is due and payable. Note: The Commissioner may defer the time at which the income tax is due and payable: see section 255‑10 in Schedule 1 to the Taxation Administration Act 1953. (2) The income tax is only due and payable if the Commissioner makes an *assessment of your income tax for the year. (3) However, if the Commissioner does make an *assessment of your income tax for the year, the tax may be taken to have been due and payable at a time before your assessment was made. Note: This is to ensure that general interest charge begins to accrue from the same date for all like entities. General interest charge on unpaid income tax is calculated from when the tax is due and payable, not from when the assessment is made: see section 5‑15. Original assessments—self‑assessment entities (4) If you are a *self‑assessment entity, the income tax is due and payable on the first day of the sixth month after the end of the income year. Example: If your income year is the same as the financial year, your income tax would be due and payable on 1 December. Original assessments—other entities (5) If you are not a *self‑assessment entity, the income tax is due and payable 21 days after the day (the return day) on or before which you are required to lodge your *income tax return with the Commissioner. Note: For rules about income tax returns and when they are due, see Part IV of the Income Tax Assessment Act 1936. (6) However, if you lodge your return on or before the return day and the Commissioner gives you a notice of *assessment (other than an amended assessment) after the return day, the income tax is due and payable 21 days after the Commissioner gives you the notice. Amended assessments (7) If the Commissioner amends your *assessment, any extra income tax resulting from the amendment is due and payable 21 days after the day on which the Commissioner gives you notice of the amended assessment. Note: Shortfall interest charge may be payable, on any amount of extra income tax payable as a result of the amended assessment, for each day in the period that: (a) starts at the time income tax was due and payable on your original assessment; and (b) ends the day before the day on which the Commissioner gives you notice of the amended assessment. 5‑10 When shortfall interest charge is payable An amount of *shortfall interest charge that you are liable to pay is due and payable 21 days after the day on which the Commissioner gives you notice of the charge. Note: Shortfall interest charge is imposed if the Commissioner amends an assessment and the amended assessment results in an increase in some tax payable. For provisions about liability for shortfall interest charge, see Division 280 in Schedule 1 to the Taxation Administration Act 1953. 5‑15 General interest charge payable on unpaid income tax or shortfall interest charge If an amount of income tax or *shortfall interest charge that you are liable to pay remains unpaid after the time by which it is due to be paid, you are liable to pay the *general interest charge on the unpaid amount for each day in the period that: (a) starts at the beginning of the day on which the amount was due to be paid; and (b) finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid: (i) the income tax or shortfall interest charge; (ii) general interest charge on any of the income tax or shortfall interest charge. Note 1: The general interest charge is worked out under Part IIA of the Taxation Administration Act 1953. Note 2: Shortfall interest charge is worked out under Division 280 in Schedule 1 to that Act. Division 6—Assessable income and exempt income Guide to Division 6 Table of sections 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 6‑1 Diagram showing relationships among concepts in this Division (1) Assessable income consists of ordinary income and statutory income. (2) Some ordinary income, and some statutory income, is exempt income. (3) Exempt income is not assessable income. (4) Some ordinary income, and some statutory income, is neither assessable income nor exempt income. For the effect of the GST in working out assessable income, see Division 17. (5) An amount of ordinary income or statutory income can have only one status (that is, assessable income, exempt income or non‑assessable non‑exempt income) in the hands of a particular entity. Operative provisions 6‑5 Income according to ordinary concepts (ordinary income) (1) Your assessable income includes income according to ordinary concepts, which is called ordinary income. Note: Some of the provisions about assessable income listed in section 10‑5 may affect the treatment of ordinary income. (2) If you are an Australian resident, your assessable income includes the *ordinary income you *derived directly or indirectly from all sources, whether in or out of Australia, during the income year. (3) If you are a foreign resident, your assessable income includes: (a) the *ordinary income you *derived directly or indirectly from all *Australian sources during the income year; and (b) other *ordinary income that a provision includes in your assessable income for the income year on some basis other than having an *Australian source. (4) In working out whether you have derived an amount of *ordinary income, and (if so) when you derived it, you are taken to have received the amount as soon as it is applied or dealt with in any way on your behalf or as you direct. 6‑10 Other assessable income (statutory income) (1) Your assessable income also includes some amounts that are not *ordinary income. Note: These are included by provisions about assessable income. For a summary list of these provisions, see section 10‑5. (2) Amounts that are not *ordinary income, but are included in your assessable income by provisions about assessable income, are called statutory income. Note 1: Although an amount is statutory income because it has been included in assessable income under a provision of this Act, it may be made exempt income or non‑assessable non‑exempt income under another provision: see sections 6‑20 and 6‑23. Note 2: Many provisions in the summary list in section 10‑5 contain rules about ordinary income. These rules do not change its character as ordinary income. (3) If an amount would be *statutory income apart from the fact that you have not received it, it becomes statutory income as soon as it is applied or dealt with in any way on your behalf or as you direct. (4) If you are an Australian resident, your assessable income includes your *statutory income from all sources, whether in or out of Australia. (5) If you are a foreign resident, your assessable income includes: (a) your *statutory income from all *Australian sources; and (b) other *statutory income that a provision includes in your assessable income on some basis other than having an *Australian source. 6‑15 What is not assessable income (1) If an amount is not *ordinary income, and is not *statutory income, it is not assessable income (so you do not have to pay income tax on it). (2) If an amount is *exempt income, it is not assessable income. Note: If an amount is exempt income, there are other consequences besides it being exempt from income tax. For example: * the amount may be taken into account in working out the amount of a tax loss (see section 36‑10); * you cannot deduct as a general deduction a loss or outgoing incurred in deriving the amount (see Division 8); * capital gains and losses on assets used solely to produce exempt income are disregarded (see section 118‑12). (3) If an amount is *non‑assessable non‑exempt income, it is not assessable income. Note 1: You cannot deduct as a general deduction a loss or outgoing incurred in deriving an amount of non‑assessable non‑exempt income (see Division 8). Note 2: Capital gains and losses on assets used to produce some types of non‑assessable non‑exempt income are disregarded (see section 118‑12). 6‑20 Exempt income (1) An amount of *ordinary income or *statutory income is exempt income if it is made exempt from income tax by a provision of this Act or another *Commonwealth law. For summary lists of provisions about exempt income, see sections 11‑5 and 11‑15. (2) *Ordinary income is also exempt income to the extent that this Act excludes it (expressly or by implication) from being assessable income. (3) By contrast, an amount of *statutory income is exempt income only if it is made exempt from income tax by a provision of this Act outside this Division or another *Commonwealth law. (4) If an amount of *ordinary income or *statutory income is *non‑assessable non‑exempt income, it is not exempt income. Note: An amount of non‑assessable non‑exempt income is not taken into account in working out the amount of a tax loss. 6‑23 Non‑assessable non‑exempt income An amount of *ordinary income or *statutory income is non‑assessable non‑exempt income if a provision of this Act or of another *Commonwealth law states that it is not assessable income and is not *exempt income. Note: Capital gains and losses on assets used to produce some types of non‑assessable non‑exempt income are disregarded (see section 118‑12). For a summary list of provisions about non‑assessable non‑exempt income, see Subdivision 11‑B. 6‑25 Relationships among various rules about ordinary income (1) Sometimes more than one rule includes an amount in your assessable income: * the same amount may be *ordinary income and may also be included in your assessable income by one or more provisions about assessable income; or * the same amount may be included in your assessable income by more than one provision about assessable income. For a summary list of the provisions about assessable income, see section 10‑5. However, the amount is included only once in your assessable income for an income year, and is then not included in your assessable income for any other income year. (2) Unless the contrary intention appears, the provisions of this Act (outside this Part) prevail over the rules about *ordinary income. Note: This Act contains some specific provisions about how far the rules about ordinary income prevail over the other provisions of this Act. Division 8—Deductions Table of sections 8‑1 General deductions 8‑5 Specific deductions 8‑10 No double deductions 8‑1 General deductions (1) You can deduct from your assessable income any loss or outgoing to the extent that: (a) it is incurred in gaining or producing your assessable income; or (b) it is necessarily incurred in carrying on a *business for the purpose of gaining or producing your assessable income. Note: Division 35 prevents losses from non‑commercial business activities that may contribute to a tax loss being offset against other assessable income. (2) However, you cannot deduct a loss or outgoing under this section to the extent that: (a) it is a loss or outgoing of capital, or of a capital nature; or (b) it is a loss or outgoing of a private or domestic nature; or (c) it is incurred in relation to gaining or producing your *exempt income or your *non‑assessable non‑exempt income; or (d) a provision of this Act prevents you from deducting it. For a summary list of provisions about deductions, see section 12‑5. (3) A loss or outgoing that you can deduct under this section is called a general deduction. For the effect of the GST in working out deductions, see Division 27. Note If you receive an amount as insurance, indemnity or other recoupment of a loss or outgoing that you can deduct under this section, the amount may be included in your assessable income: see Subdivision 20‑A. 8‑5 Specific deductions (1) You can also deduct from your assessable income an amount that a provision of this Act (outside this Division) allows you to deduct. (2) Some provisions of this Act prevent you from deducting an amount that you could otherwise deduct, or limit the amount you can deduct. (3) An amount that you can deduct under a provision of this Act (outside this Division) is called a specific deduction. Note: If you receive an amount as insurance, indemnity or other recoupment of a deductible expense, the amount may be included in your assessable income: see Subdivision 20‑A. For a summary list of provisions about deductions, see section 12‑5. 8‑10 No double deductions If 2 or more provisions of this Act allow you deductions in respect of the same amount (whether for the same income year or different income years), you can deduct only under the provision that is most appropriate. Part 1‑4—Checklists of what is covered by concepts used in the core provisions Division 9—Entities that must pay income tax Table of sections 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 9‑1A Effect of this Division This Division is a *Guide. 9‑1 List of entities Income tax is payable by the entities listed in the table. Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold, are provisions of the Income Tax Assessment Act 1936. Item Income tax is payable by this kind of entity: because of this provision: 1 An individual section 4‑1 2 A company, that is: section 4‑1  a body corporate; or  an unincorporated body (except a partnership) 3 A company that was a member of a wholly‑owned group if a former subsidiary in the group is treated as having disposed of leased plant and does not pay all of the income tax resulting from that treatment section 45‑25 3A A company that is a corporate collective investment vehicle (CCIV) Subdivision 195 C 3B The trustee of an attribution managed investment trust (AMIT) sections 276 405 to 276 425 4 A superannuation provider in relation to a complying superannuation fund sections 295‑5 and 295‑605 5 A superannuation provider in relation to a non‑complying superannuation fund sections 295‑5 and 295‑605 6 A superannuation provider in relation to a complying approved deposit fund section 295‑5 7 A superannuation provider in relation to a non‑complying approved deposit fund section 295‑5 8 The trustee of a pooled superannuation trust section 295‑5 8A A sovereign entity section 880‑55 9 A corporate limited partnership section 94J 10 A mutual insurance association (as described in section 121) section 121 11 A trustee (except one covered by another item in this table), but only in respect of some kinds of income of the trust sections 98, 99, 99A and 102 13 The trustee of a public trading trust section 102S 9‑5 Entities that work out their income tax by reference to something other than taxable income (1) For some entities, some or all of their income tax for the *financial year is worked out as described in the table. Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold, are provisions of the Income Tax Assessment Act 1936. Item This kind of entity is liable to pay income tax worked out by reference to: See: 1 A company that was a member of a wholly‑owned group is jointly and severally liable to pay an amount of income tax if a former subsidiary in the group is treated as having disposed of leased plant and does not pay all of the income tax resulting from that treatment. section 45‑25 1A The trustee of an attribution managed investment trust (AMIT) is liable to pay income tax on certain amounts reflecting under attribution of income or over attribution of tax offsets sections 276 405 to 276 425 2 A superannuation provider in relation to a complying superannuation fund is to be assessed and is liable to pay income tax on no‑TFN contributions income as well as on taxable income. sections 295‑5 and 295‑605 3 A superannuation provider in relation to a non‑complying superannuation fund is to be assessed and is liable to pay income tax on no‑TFN contributions income as well as on taxable income. sections 295‑5 and 295‑605 4 An RSA provider is to be assessed and is liable to pay income tax on no‑TFN contributions income as well as on taxable income. sections 295‑5, 295‑605 and 320‑155 5 An Australian resident individual with: section 23AF or 23AG  eligible foreign remuneration under section 23AF; or  foreign earnings under section 23AG; (from working in a foreign country) is liable to pay income tax worked out by reference to his or her assessable income less some of his or her deductions. 6 A trustee covered by item 11 in the table in section 9‑1 is liable to pay income tax worked out by reference to the net income of the trust for the income year. sections 98, 99 and 99A 8 The trustee of a public trading trust is liable to pay income tax worked out by reference to the net income of the trust for the income year. section 102S 9 An entity that is liable to pay income tax (worked out by reference to taxable income or otherwise) is also liable to pay income tax worked out by reference to diverted income or diverted trust income for the income year. section 121H 10 An Australian insurer that re‑insures overseas can elect to pay, as agent for the re‑insurer, income tax worked out by reference to the amount of the re‑insurance premiums. section 148 (2) For entities covered by an item in the table in subsection (1), the income year is the same as the *financial year, except in these cases: (a) for a company, or an entity covered by item 2 or 3 in the table, the income year is the previous financial year; (b) if an entity has an accounting period that is not the same as the financial year, each such accounting period or, for a company, each previous accounting period is an income year. Note 1: The Commissioner can allow an entity to adopt an accounting period ending on a day other than 30 June. See section 18 of the Income Tax Assessment Act 1936. Note 2: An accounting period ends, and a new accounting period starts, when a partnership becomes, or ceases to be, a VCLP, an ESVCLP, an AFOF or a VCMP. See section 18A of the Income Tax Assessment Act 1936. Division 10—Particular kinds of assessable income 10‑1 Effect of this Division This Division is a *Guide. 10‑5 List of provisions about assessable income The provisions set out in the table: * include in your assessable income amounts that are not *ordinary income; and * vary or replace the rules that would otherwise apply for certain kinds of *ordinary income. Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold, are provisions of the Income Tax Assessment Act 1936. Accrued leave transfer payments .................................... 15‑5 alienated personal services income .................................... 86‑15 allowances see employment annual leave see leave payments annuities .................................... 27H approved deposit fund (ADFs) see superannuation attributable income see controlled foreign corporations avoidance of tax general ................................. 177F diversion of income ......................... 121H see also transfers of income bad debts see recoupment balancing adjustment see capital allowances, investments, R&D, scientific research and tax exempt entities banking offshore banking unit, deemed interest on payments to by owner 121EK barter transactions ............................................