INCOME TAX ASSESSMENT ACT 1997 No. 38 of 1997 - SECT 12.5 List of provisions about deductions
INCOME TAX ASSESSMENT ACT 1997 No. 38 of 1997 - SECT 12.5
List of provisions about deductionsThe 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 51(3) advance expenditure generally 82KZL to 82KZO avoidance arrangements 82KJ when deductible 82KZM associated persons associated persons and relatives, amounts paid to, reduction of deduction 65(1) to 65(1F) family members, expenses incurred in maintaining, no deduction for 65(2) averaging of incomes generally 149 to 158A excess of allowable deductions 154 bad debts general 63, 63F companies 63A to 63CA debt/equity swaps 63E, 63F money lenders, listed country branches, no deduction for 63D see also losses banks Commonwealth Savings Bank of Australia 160ABB foreign banks, Australian branches of 160ZZVA to 160ZZZJ boats no deduction for 51AB see also depreciation borrowing expenses 67 buildings capital allowances Division 40 income producing buildings, capital allowances Division 43 see also heritage conservation work capital allowances Division 40 see also depreciation and development allowance capital gains no deduction for an amount that would otherwise be deductible only because a net capital gain is included in assessable income 51AAA capital loss net capital loss, no deduction for 160ZO net capital loss, transfer within company group 160ZP car disposal see depreciation 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 car expenses of employee employee's car expenses where car provided by employer can be used for private purposes, no deduction for 51AF car parking employee's car parking expenses, no deduction for 51AGA self-employed persons, partnerships and trusts car parking expenses, no deduction for 51AGB self-employed persons, partnerships and trusts car parking expenses, reduced deduction approved using allowed method 89A to 89JC children's income generally 102AA to 102AJ taxable income of a child, deductions taken into consideration in calculating 102AD club fees club fees, no deduction for 51AB see also subscriptions to associations 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 composite incomes more than one class of income, order in which deductions must be claimed if entity in receipt of 50 controlled foreign companies generally 316 to 468 bad debts 399A depreciation 398 finance share dividends 394 taxes paid 393 convertible notes see interest copyrights expenditure in obtaining registration 68A currency exchange gains and losses see foreign exchange depreciation generally 54 to 62AAV calculation of depreciation 56 car disposal, balancing adjustment under section 59 may be reduced by Commissioner 59AAA deduction for 54 disposal, loss or destruction of depreciated property, balancing adjustment 59 iron and steel production, special depreciation 57AK motor vehicle, limit on cost price 57AF partial use of property, only partial deduction 61 roll-over relief, unpooled property 58 trading ships, special depreciation 57AM designs expenditure in obtaining or extending registration 68A development allowance generally 82AAAA to 82AQ disposal of property after 12 months. 82AH leased property, limit on deduction for . 26-55 lessor may transfer benefit of deduction to lessee 82AD new property, capital expenditure incurred after 26 February 1992, additional deduction 82AB, 82AM disposal of depreciated property see depreciation dividends debt dividends 67AA franking credits, companies and non-residents 160AR, 160ARD franking credits, pooled development funds (PDFs) 124ZM drought investment allowance see primary production education expenses Higher Education Contribution Scheme, no deduction unless provided as fringe benefit 51(6), 51(6A) limit on deduction 82A election expenses Federal and State Parliament election expenses 74, 74B local government election expenses, limited deduction for 74A, 74B electricity connections capital cost of 70A embezzlement embezzlement, defalcation, larceny, misappropriation, losses caused by 71 employees pensions, gratuities or retiring allowances for ex-employees 78 see also shares entertainment expenditure, no deduction for some 51AE meal entertainment, calculation of deductible amount 51AEA to 51AEC environment environmental impact studies 82B to 82BG environment protection expenditure 82BH to 82BR exploration and prospecting Subdivision 330-A film income Australian films 124ZAA to 124ZAP exempt film income 23H see also losses financial arrangements see borrowing expenses, infrastructure borrowings, interest, leases and securities foreign exchange losses 82U to 82ZB foreign income limit on deduction 79D 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 foreign tax credits generally 160AE to 160AFF Australian branch of a foreign bank, foreign tax paid on interest received by the branch from a place outside Australia 160ZZY 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 gifts general 78 cultural organisations, eligibility criteria 78AA environmental organisations, eligibility criteria 78AB limit on deduction 26-55 see also tax avoidance schemes grape vines see primary production horticultural plants see primary production heritage conservation work generally 159U to 159UY rebate, no deduction if entitled to a 159UU Higher Education Contribution Scheme (HECS) no deduction for unless fringe benefit 51(6), 51(6A) income equalisation deposits see primary production industrial property generally 124K to 124Z deduction for 124M disposal or lapse of a unit of industrial property 124N, 124PA, 124Q copyright design and patents, expenditure in obtaining grant or registration 68A infrastructure borrowings generally 159GZZZZD to 159GZZZZH no deduction for 159GZZZZE insurance and annuity business generally 116E to 116J assets, notional Part IIIA disposal of 116GA benefits or reinsurance premiums, no deduction for 116HAD deductions for 116H investment component, cost of obtaining 116HAC superannuation premiums, expenditure incurred in obtaining 116HAB 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 interest convertible notes, interest on, generally 82L to 82T interest for underpayment or late payment of tax 51(5) interest, no deduction for interest paid by a non-resident until the withholding tax payable has been paid 221YRA(1) life assurance premiums, interest etc. on loans to finance, no deduction for 67AAA non-residents, debt creation involving, generally 159GZY to 159GZZF superannuation contributions, interest etc. on loans to finance, no deduction for 67AAA thin capitalisation by non-residents, generally 159GZA to 159GZX see also infrastructure borrowings international agreements see transfer pricing international profit shifting see transfer pricing investment company see shares iron and steel production special depreciation for property used in basic iron and steel production 57AK land degradation see primary production larceny see embezzlement lease document expenses 68 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 improvements on leased land and premiums, leases assigned or surrendered before 23 October 1964 and for mining leases assigned or surrendered before 10 May 1968 83 to 89, 88A(3) leveraged arrangements, property used: . other than to produce assessable income; or . by a non-resident outside Australia; or . by a previous owner 51AD leave payments accrued leave transfer payments 51(3) no deduction for leave payments until paid 51(3) legal expenses capital legal expenses, limited deduction for 64A leisure facilities no deduction for 51AB life assurance companies 110 to 116DK loans see borrowing expenses, interest and securities losses foreign exchange 82U to 82ZB profit-making undertaking or scheme 52 property sale 52 traditional securities, loss on disposal or redemption of 70B see also tax losses management and investment company shares see shares membership of associations see subscriptions to associations mining generally Division 330 gold mining 159GZZG to 159GZZZBI uranium mining 23D mortgage expenses of discharging a mortgage 67A motor vehicles see car expenses and leases non-cash transactions non-cash business benefits 51AK non-cash consideration, money value deemed to have been paid or given 21 non-resident trust estates generally 102AAA to 102AAZG modified application of depreciation provisions 102AAY modified application of trading stock provisions 102AAZ no deductions allowable under section 79E, 79F, 80, 80AAA or 80AA 102AAZC offshore banking units generally 121A to 121EL deductions for 121EG foreign tax deduction 121EI partnerships losses, partner's share of partnership loss 90, 92 patents expenditure relating to grant of patents, etc. 68A penalties no deduction for penalties 51(4) petroleum prospecting and mining generally Division 330 petroleum resource rent tax payments Subdivision 330-G plant and articles see capital allowances and depreciation pooled development funds (PDFs) 124ZM to 124ZZD prepaid expenditure see advance expenditure primary production drought investment allowance, generally 625 to 684 grape vines, expenditure incurred in establishing 75AA horticultural plants, establishment costs of 124ZZD to 124ZZR income equalisation deposits 159GA to 159GDA land, preparing clearing ploughing or draining land for use in primary production and other activities 75A land degradation, expenses incurred in preventing 75D telephone lines, cost of extending 70 water, expenditure on conserving or conveying 75B see also electricity connections promoters recoupment tax general 78B limit on deduction 26-55 property arrangements relating to use of property if end-user an exempt public body or use outside Australia to produce exempt income 159GE to 159GO leveraged arrangements, property used: . other than to produce assessable income; or . by a non-resident outside Australia; or . by a previous owner 51AD sale of property, profit or loss 82(2) see also capital allowances, depreciation and losses public trading trusts generally 102M to 102T debt dividends, application of section 67AA 102T(4A) qualifying securities see securities quarrying Division 330 regional headquarters (RHQs) 82C to 82CE reimbursements expense payment fringe benefits, reduced deduction 51AH reinsurance see insurance with non-residents relatives, payments to see associated persons repairs general 53 repair covenants, payment for non-compliance with covenant to repair under lease 53AA research & development generally 73B to 73G scientific research 73A roads see timber royalties royalty paid where tax instalment deductions have not been made by the payer, no deduction for 221YRA scientific research see research & development securities qualifying securities 159GP to 159GZ substituted securities 23K traditional securities, loss on disposal or redemption of 70B shares buy-backs 159GZZZJ to 159GZZZT cancellation of subsidiary's shares in holding company 159GZZZC to 159GZZZI employee share acquisition schemes, deduction for provider of qualifying shares or rights 139DC see also dividends and securities State Bank of NSW no deduction under section 82AAC 121EP State or Territory bodies (STBs) body ceasing to be STB, some deductions not allowed 24AW to 24AYA subscriptions to associations 73 substantiation work, travel and car expenses Division 900 successive deductions setting off deductions where more than one class of income 49 superannuation see insurance and annuity business and interest superannuation and related business generally 267 to 315F asset disposals 304 death or disability benefits, deduction for future service element 279B death or disability cover, premiums for 279 detriment payments 279D financial assistance levy 315B, 315F superannuation-eligible person contributions general 82AAS to 82AAT limit on deduction 26-55 superannuation-employer contributions generally 82AAA to 82AAR contributions to eligible superannuation fund for employees 82AAC contributions to non-complying funds 82AAD, 82AAE deposits under the Small Superannuation Accounts Act 1995 82AAF no deduction for under any other provision of the Act 82AAR superannuation guarantee charge no deduction for 51(9) superannuation levy late lodgment amount, no deduction for 51(8) tax agent's fees see tax related expenses tax avoidance schemes companies, use of tax losses or deductions to avoid tax Division 175 diverted assessable income 121F to 121L dividend stripping 46A, 177E gifts 78A international profit shifting, transfer pricing 136AA to 136AG prepaid outgoings to avoid tax 82KJ recouped expenditure 82KH to 82KL tax avoidance scheme, no deduction allowable where deduction the result of. 177A to 177G trading stock 31C, 52A tax file number (TFN) withholding tax investor, no deduction for 221YHZZA tax losses bad debts, companies 63CA change of ownership or control of a company generally Division 165 for earlier income years Subdivision 165-A for income year of the change Subdivision 165-B earlier income years Division 36 film losses Subdivision 375-G pooled development funds Subdivision 195-A transfer between companies in same wholly-owned group Subdivision 170-A tax related expenses 69 telephone lines see primary production timber access roads for timber operations, expenditure on 124F land attributable to felled timber, part of purchase price 124J mill buildings, expenditure on 124JA to 124JD trading ships see depreciation trading stock Commissioner may determine whether consideration paid for chose in action is reasonable 52A excess of opening stock over closing value 28(3) expenditure deemed not to be of a capital nature 51(2) prepayments, when stock becomes trading stock on hand 51(2A) see also tax avoidance schemes traditional securities see securities training guarantee training guarantee charge, no deduction for 51(7) transfer pricing generally 136AA to 136AG adjustments to deductions 136AF travel expenses accompanying relatives, no deduction for some travel expenses 51AG see also substantiation trusts trust income, deductions considered in calculating 95 to 102 unit trusts 102D to 102L see also non-resident trust estates and public trading trusts uniforms non-compulsory uniforms 51AL uranium mining see mining water see primary production work expenses see substantiation