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INCOME TAX ASSESSMENT ACT 1997 - SECT 12.5

List of provisions about deductions [see Notes 2 and 5]

                   The provisions set out in the table contain rules about specific types of deduction.

                   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

 

.....................................................................................................

26‑10

advance expenditure

 

generally ....................................................................................

82KZL to 82KZO

avoidance arrangements .........................................................

82KJ

when deductible .......................................................................

82KZM to 82KZN

bad debts

 

deduction reduced because of forgiveness of debt if debtor and creditor are companies under common ownership and agree on the reduction...........................



245‑90 of Schedule 2C

general .......................................................................................

25‑35, 63F

companies .................................................................................

Subdivisions
165‑C, 166‑C and 175‑C

debt/equity swaps ...................................................................

63E, 63F , 709‑220

deduction of a debt that used to be owed to a member of a consolidated group or MEC group by an entity that used to be a member of the group ..................................

Subdivisions
709‑D and 719‑I

money lenders, listed country branches, no deduction
for .........................................................................................


63D

see also losses

 

balancing adjustment

 

see buildings , capital allowances , industrial property , research & development and tax exempt entities

 

banks

 

foreign banks, Australian branches of .................................

160ZZVA to 160ZZZJ

boats

 

deferral of deductions .............................................................

26‑47

borrowing expenses

 

.....................................................................................................

25‑25

bribes to foreign public officials .......................................................

26‑52

bribes to public officials .....................................................................

26‑53

buildings

 

income producing buildings, capital allowances ................

Division 43

see also heritage conservation work

 

capital allowances

 

generally ....................................................................................

Division 40

balancing adjustments ............................................................

40‑285(2), 40‑370

business related costs ............................................................

40‑880

electricity and telephone lines ...............................................

40‑645

environmental protection activities ......................................

40‑755

exploration or prospecting .....................................................

40‑80(1), 40‑730

in‑house software ....................................................................

40‑335, 40‑455

intellectual property ................................................................

Subdivisions 40‑B and 40‑I

IRUs ...........................................................................................

Subdivision 40‑B

landcare operations .................................................................

40‑630

low‑value and software development pools ........................

Subdivision 40‑E

mining and quarrying ..............................................................

Subdivision 40‑H and Subdivision 40‑I

Petroleum Resource Rent Tax ................................................

40‑750

project pools .............................................................................

40‑830, 40‑832

reducing deductions ...............................................................

40‑25, 40‑290

spectrum licences ....................................................................

Subdivision 40‑B

tax preferred use of asset.........................................................

Division 250

telecommunications site access rights .................................

Subdivision 40‑B

trees in carbon sink forests ....................................................

Subdivision 40‑J

water facilities and horticultural plants ................................

Subdivision 40‑F

capital gains

 

beneficiary whose assessable income includes share of net income of trust with net capital gain.........................


115‑215

no deduction for an amount that would otherwise be deductible only because a net capital gain is included in assessable income.........................................................



51AAA

see also foreign residents

 

capital loss

 

net capital loss, no deduction for ..........................................

102‑10

net capital loss, transfer within company group .................

Subdivision 170‑B

car disposal

 

see capital allowances

 

car expenses

 

generally ....................................................................................

Division 28

"cents per kilometre" method ................................................

Subdivision 28‑C

"log book" method ..................................................................

Subdivisions 28‑F and 28‑G

"one‑third of actual expenses" method ................................

Subdivision 28‑E

substantiation of car expenses ..............................................

Division 900

"12% of original value" method ............................................

Subdivision 28‑D

see also transport expenses

 

car expenses of employee

 

employee's car expenses where car provided by employer can be used for private purposes, no deduction for ....



51AF

carried interests

 

carried interests, no deduction for.........................................

118‑21

car parking

 

employee's car parking expenses, no deduction for ..........

51AGA

children's income

 

generally ....................................................................................

102AA to 102AH

taxable income of a child, deductions taken into consideration in calculating .............................................


102AD

club fees

 

club fees, no deduction for ....................................................

26‑45

see also subscriptions to associations

 

Commonwealth places windfall tax

 

.....................................................................................................

26‑17

companies, co‑operative and mutual

 

generally ....................................................................................

117 to 121

distributions of assessable income .......................................

120

companies, private

 

excessive payments to shareholders directors and associates, reduced deduction ........................................


109

conservation covenants

 

.....................................................................................................

Division 31

controlled foreign companies

 

generally ....................................................................................

316 to 468

bad debts ..................................................................................

399A

decline in value of depreciating assets ................................

398

finance share dividends ..........................................................

394

taxes paid ..................................................................................

393

convertible notes

 

see interest

 

copyrights

 

expenditure in obtaining registration ....................................

Subdivisions 40‑B and 40‑I

currency exchange gains and losses

 

see foreign exchange

 

death of timber owner

 

see timber

 

debt interests

 

certain returns in respect of debt interests...........................

25‑85

depreciation

 

see capital allowances

 

designs

 

expenditure in obtaining or extending registration .............

Subdivisions 40‑B and 40‑I

disposal of depreciating assets

 

see capital allowances

 

dividends

 

dividends including LIC capital gain component ...............

115‑280

franking credits, companies and foreign residents..............

207‑95(2), 207‑95(3), 220‑405(3)

franking credits, pooled development funds (PDFs) .........

124ZM

non‑share equity interests, no deduction for return in respect of ............................................................................


26‑26

unfranked non‑portfolio dividends........................................

46FA

education expenses

 

Higher Education Contribution Scheme, no deduction unless provided as fringe benefit ...................................


26‑20

limit on deduction ....................................................................

82A

election expenses

 

Federal and State Parliament election expenses ..................

25‑60, 25‑70

local government election expenses, limited deduction
for..........................................................................................


25‑65, 25‑70

electricity connections

 

see capital allowances

 

embezzlement

 

see theft

 

employees

 

pensions, gratuities or retiring allowances for ex‑employees ......................................................................


25‑50

see also shares

 

entertainment

 

expenditure, no deduction for some .....................................

Division 32

meal entertainment, calculation of deductible amount .......

51AEA to 51AEC

environment

 

see capital allowances

 

excess contributions tax

 

no deduction ............................................................................

26‑75

exploration and prospecting

 

see capital allowances

 

family

 

no deduction for maintaining spouse or child.....................

26‑40

family tax benefit

 

fee or commission for advice .................................................

25‑7

farm management deposits

 

see primary production

 

film income

 

Australian films ........................................................................

124ZAA to 124ZAP

see also tax losses

 

film licensed investment companies (FLICs)

 

see shares

 

financial arrangements

 

see borrowing expense s, infrastructure borrowings , interest , leases and securities

 

foreign exchange

 

losses .........................................................................................

775‑30

foreign financial entities' Australian permanent establishments

 

generally.....................................................................................

Part IIIB

thin capitalisation.....................................................................

Subdivision
820‑FB

transfer of losses......................................................................

Subdivisions
170‑A and 170‑B

foreign investment funds (FIFs)

 

generally ....................................................................................

469 to 624

loss under cash surrender values method ...........................

533

loss under market value method ............................................

532

notional deductions ................................................................

567 to 574

foreign life assurance policies

 

see foreign investment funds

 

forestry managed investment schemes

 

payments under scheme..........................................................

394‑10(1)

franchise fees windfall tax

 

.....................................................................................................

26‑15

freight

 

freight for shipped goods .......................................................

135A

fringe benefits

 

contributions for private component, no deduction for ....

51AJ

employee's car expenses where car provided by employer can be used for private purposes, no deduction for ....



51AF

employee's car parking expenses, no deduction for ..........

51AGA

expense payment fringe benefits, reduced deduction .......

51AH

general insurance

 

claims paid.................................................................................

321‑25 and 323‑20 of Schedule 2J

increase in value of outstanding claims liability..................

321‑15 and 323‑10 of Schedule 2J

increase in value of unearned premium reserve...................

321‑55 of Schedule 2J

gifts

 

general .......................................................................................

Division 30

limit on deduction ....................................................................

26‑55

see also tax avoidance schemes

 

horticultural plants

 

see capital allowances

 

higher education assistance

26‑20

illegal activities

26‑54

income equalisation deposits

 

see primary production

 

industrial property

 

unit relating to copyright in Australian film.........................

124K to 124Z

see also intellectual property and research and development

 

infrastructure borrowings

 

generally ....................................................................................

159GZZZZD to 159GZZZZH

no deduction for ......................................................................

159GZZZZE

insurance with non‑residents

 

generally ....................................................................................

141 to 148

insurance premiums, no deduction unless arrangement to pay tax .................................................................................


145

reinsurance, no deduction for resident carrying on insurance business in Australia for reinsurance premiums paid to a non‑resident .....................................



148

intellectual property

 

see capital allowances

 

interest

 

convertible notes, interest on, generally ..............................

82L to 82T

foreign residents, debt creation involving, generally ........

159GZY to 159GZZF

foreign residents, delayed deduction for interest paid to until withholding tax payable has been paid .................


26‑25

life assurance premiums, interest etc. on loans to finance, no deduction for ................................................................


26‑85

superannuation contributions, interest etc. on loans to finance, no deduction for .................................................


26‑80

underpayment or late payment of tax, interest for ..............

25‑5

see also infrastructure borrowings

 

international agreements

 

see transfer pricing

 

international profit shifting

 

see transfer pricing

 

investment company

 

see shares

 

IRUs

 

see capital allowances

 

land degradation

 

see primary production

 

lease document expenses

 

.....................................................................................................

25‑20

leases

 

finance leases and arrangements, use of property if end‑user an exempt public body or use outside Australia to produce exempt income ..............................



159GE to 159GO

leases of assets being put to tax preferred use....................

Division 250

payment for failure to comply with lease obligation to repair premises....................................................................


25‑15

leveraged arrangements, property used:

 

      *  other than to produce assessable income; or

 

      *  by a non‑resident outside Australia ; or

 

      *  by a previous owner

 

.....................................................................................................

51AD

leases of luxury cars

 

accrual amounts........................................................................

Schedule 2E (42A‑50)

adjustment amounts (lessee)..................................................

Schedule 2E (42A‑70(1))

adjustment amounts (lessor)...................................................

Schedule 2E (42A‑65(3))

lease payments not deductible...............................................

Schedule 2E (42A‑55)

payments to acquire car not deductible................................

Schedule 2E (42A‑85 and 42A‑100)

leave payments

 

accrued leave transfer payments ...........................................

26‑10

no deduction for leave payments until paid ........................

26‑10

leisure facilities

 

no deduction for ......................................................................

26‑50

life insurance companies ....................................................................

Subdivision 320‑C

limited recourse debt

 

later payments...........................................................................

243‑45

later payments (replacement debt).........................................

243‑50

loans

 

see borrowing expenses , interest and securities

 

losses

 

foreign exchange ......................................................................

775‑30

profit‑making undertaking or scheme ...................................

25‑40

property sale .............................................................................

25‑40

traditional securities, loss on disposal or redemption of ...

70B

see also tax losses

 

management and investment company shares

 

see shares