Income Tax Assessment Amendment Act (No. 2) 1980 (Cth)
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BE IT ENACTED by the Queen, and the Senate and the House of Representatives of the Commonwealth of Australia, as follows:
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(a) the unit of property has been leased under an agreement (in this section referred to as the ‘relevant lease agreement’);
(b) all or any of the charges paid or payable by the lessee under the relevant lease agreement have been allowed or are allowable in whole or in part as a deduction or deductions from the assessable income of the lessee or of any other person of any year of income;
(c) on or after 22 August 1979, and whether during or after the period of the relevant lease agreement, the lessor disposed of the unit of property to the lessee, to an associate of the lessee or to persons including the lessee or an associate of the lessee otherwise than under a contract between the lessor and the lessee, the lessor and the associate or the lessor and those persons, as the case may be, that was entered into before that date; and
(d) at any later time, a person (in this section referred to as a ‘relevant taxpayer’), being the lessee or an associate of the lessee, disposed of the unit of property or of an interest in the unit of property and the consideration receivable by the relevant taxpayer in respect of the disposal exceeded—
(i) in a case where the unit of property was disposed of—the cost of the unit of property to the relevant taxpayer; or
(ii) in a case where an interest in the unit of property was disposed of—the amount that, in the opinion of the Commissioner, was the cost of the interest to the relevant taxpayer.
“(2) Subject to this section, the amount of the excess referred to in paragraph (d) of sub-section (1) in relation to the disposal by a relevant taxpayer of a unit of property to which this section applies shall be included in the assessable income of that relevant taxpayer of the year of income in which the disposal occurred to the extent that that amount does not exceed the lower or the lowest, as the case requires, of the amounts respectively applicable in accordance with the following paragraphs:
(a) the amount of depreciation that is deemed in accordance with sub-section (6) to have been allowable to the lessee in respect of the unit of property in respect of the period of the relevant lease agreement;
(b) the amount, or the sum of the amounts, of the charges paid or payable under the relevant lease agreement that have been allowed or are allowable as a deduction or deductions in respect of the unit of property from the assessable income of the lessee or of any other person of any year of income;
(c) if the unit of property was disposed of by the lessor to 2 or more persons (whether or not the relevant taxpayer was one of those persons) or to a person other than the relevant taxpayer—the amount by which the consideration receivable by the relevant taxpayer in respect of the disposal of the unit of property by the relevant taxpayer exceeded—
(i) in a case to which sub-paragraph (ii) does not apply—the cost of the unit of property to the persons, or to the person, as the case may be, to whom the lessor disposed of the property; or
(ii) in a case where, after the property was disposed of by the lessor and before the disposal by the relevant taxpayer, expenditure (in this sub-paragraph referred to as the ‘relevant capital expenditure’) of a capital nature was incurred in respect of the property by any person, being expenditure that is not, by virtue of sub-section (17), deemed to be expenditure that is directly attributable to the acquisition of the property by the persons or the person, as the case may be, to whom the lessor disposed of the property—the cost of the unit of property to the persons or to the person, as the case may be, to whom the lessor disposed of the property increased by the amount of the relevant capital expenditure.
“(3) Subject to this section, so much (if any) as the Commissioner determines of the amount of the excess referred to in paragraph (d) of sub-section (1) in relation to the disposal by a relevant taxpayer of an interest in a unit of property to which this section applies shall be included in the assessable income of that relevant taxpayer of the year of income in which the disposal occurred.
“(4) In making a determination for the purposes of sub-section (3) in relation to a disposal of an interest in a unit of property, the Commissioner shall have regard to the manner in which this section would operate in relation to that disposal if it were a disposal of a unit of property.
“(5) Where, in relation to a unit of property to which this section applies—
(a) by reason of a disposal of the unit of property by a relevant taxpayer, an amount is required to be included in the assessable income of that relevant taxpayer of a year of income by the application of this section in relation to a relevant lease agreement; and
(b) by any application or applications of this section, in relation to that relevant lease agreement, in relation to a previous disposal or previous disposals of the unit of property or of an interest in the unit of property, an amount or amounts has or have been included, is or are required to be included, or would but for sub-section (9), (10) or (12) have been or be required to be included, in the assessable income of any relevant taxpayer of any year of income in accordance with sub-section (2) or (3),
then, in determining the amount to be so included in the assessable income of the first-mentioned relevant taxpayer as mentioned in paragraph (a) of this sub-section, each of the amounts respectively applicable in accordance with paragraphs (a), (b) and (c) of sub-section (2) shall be reduced by an amount equal to the amount, or the sum of the amounts, referred to in paragraph (b) of this sub-section.
“(6) For the purposes of the operation of paragraph (a) of sub-section (2) in relation to a disposal of a unit of property to which this section applies, the depreciation that is deemed to have been allowable to the lessee in respect of the unit of property in respect of the period of the relevant lease agreement is an amount calculated in accordance with the formula , where—
A is the amount of depreciation that would have been allowed or allowable to the lessee in respect of the unit of property under section 54 if—
(a) the cost of the unit of property to the lessee had been the amount that, for the purposes of the application of the provisions of this Act relating to depreciation, is the cost (ascertained without regard to sub-sections (2a) and (2d) of section 59) of the property to the lessor; and
(b) the lessee had been entitled to a deduction or deductions calculated in accordance with paragraph (b) of sub-section (1) of section 56 in respect of the whole of the period (in this sub-section referred to as the ‘lessor’s period of ownership’) commencing on the day on which the lessor first used the property (whether for the purpose of producing assessable income or otherwise) and ending on the day on which the lessor disposed of the property;
B is the number of whole days in the period of the relevant lease agreement;
C is the number of whole days in the lessor’s period of ownership.
“(7) Where, under section 59, an amount would be included in the assessable income of the lessee if—
(a) the lessee were entitled to a deduction or deductions in respect of the unit of property as mentioned in sub-section (6);
(b) the cost of the property to the lessee had been the amount that, for the purposes of the application of the provisions of this Act relating to depreciation, is the cost (ascertained without regard to sub-sections (2a) and (2d) of section 59) of the property to the lessor;
(c) the lessee had disposed of the property at the time when the lessor disposed of the property and had not made a request under sub-section (2a) or (2d) of section 59 in respect of the disposal; and
(d) the lessee had, in respect of that disposal, received—
(i) where sub-section (3) of section 59 applies for the purpose of ascertaining the amount of the consideration receivable by the lessor in respect of the disposal of the property by the lessor— the amount ascertained in accordance with that sub-section;
(ii) where sub-section (4) of section 59 applies for the purpose of ascertaining the amount of the consideration receivable by the lessor in respect of the disposal of the property by the lessor— the amount that would be applicable under sub-paragraph (i) of this paragraph if that sub-paragraph were applicable in relation to the disposal of the property by the lessor;
(iii) where sub-sections (3) and (6) of section 59 apply for the purpose of ascertaining the amount of the consideration receivable by the lessor in respect of the disposal of the property by the lessor—the amount ascertained in accordance with those sub-sections; or
(iv) where sub-sections (4) and (6) of section 59 apply for the purpose of ascertaining the amount of the consideration receivable by the lessor in respect of the disposal of the property by the lessor—the amount that would be applicable under sub-paragraph (iii) of this paragraph if that sub-paragraph were applicable in relation to the disposal of the property by the lessor,
the component A for the purposes of the formula in sub-section (6) shall be reduced by the amount that would have been so included in the assessable income of the lessee.
“(8) Where, under section 59, a deduction would have been allowable to the lessee if—
(a) the lessee were entitled to a deduction or deductions in respect of the unit of property as mentioned in sub-section (6);
(b) the cost of the property to the lessee had been the amount that, for the purposes of the application of the provisions of this Act relating to depreciation, is the cost (ascertained without regard to sub-sections (2a) and (2d) of section 59) of the property to the lessor;
(c) the lessee had disposed of the property at the time when the lessor disposed of the property; and
(d) the lessee had, in respect of that disposal, received—
(i) where sub-section (3) of section 59 applies for the purpose of ascertaining the amount of the consideration receivable by the lessor in respect of the disposal of the property by the lessor— the amount ascertained in accordance with that sub-section;
(ii) where sub-section (4) of section 59 applies for the purpose of ascertaining the amount of the consideration receivable by the lessor in respect of the disposal of the property by the lessor— the amount that would be applicable under sub-paragraph (i) of this paragraph if that sub-paragraph were applicable in relation to the disposal of the property by the lessor;
(iii) where sub-sections (3) and (6) of section 59 apply for the purpose of ascertaining the amount of the consideration receivable by the lessor in respect of the disposal of the property by the lessor—the amount ascertained in accordance with those sub-sections; or
(iv) where sub-sections (4) and (6) of section 59 apply for the purpose of ascertaining the amount of the consideration receivable by the lessor in respect of the disposal of the property by the lessor—the amount that would be applicable under sub-paragraph (iii) of this paragraph if that sub-paragraph were applicable in relation to the disposal of the property by the lessor,
the component A for the purposes of the formula in sub-section (6) shall be increased by the amount of the deduction that would have been so allowable to the lessee.
“(9) Any amount that, apart from this sub-section, would, by reason of the disposal of a unit of property, or of an interest in a unit of property, by a relevant taxpayer, be included in the assessable income of the relevant taxpayer under this section shall be reduced by any amount that has been or will be, or the sum of any amounts that have been or will be, included in the assessable income of the relevant taxpayer of any year of income in respect of that disposal in accordance with another provision of this Act other than section 59.
“(10) Where—
(a) by reason of the operation of this section in relation to a relevant lease agreement, an amount would, apart from this sub-section and sub-section (9), be included in the assessable income of a relevant taxpayer in relation to the disposal of a unit of property, or of an interest in a unit of property, by the relevant taxpayer; and
(b) by reason of the operation of this section in relation to another relevant lease agreement or in relation to other relevant lease agreements, an amount is, or amounts are, also required to be included in the assessable income of the relevant taxpayer in relation to that disposal,
the greater, or the greatest, as the case requires, of the amounts so required to be included in that assessable income shall be included in that assessable income and the other amount, or the other amounts, as the case requires, shall not be included in that assessable income under this section.
“(11) Where—
(a) by reason of the operation of this section in relation to a relevant lease agreement, an amount would, apart from this sub-section and sub-sections (9) and (10), be included in the assessable income of a relevant taxpayer in relation to the disposal of a unit of property by the relevant taxpayer;
(b) after the property was disposed of by the lessor as mentioned in paragraph (c) of sub-section (1) and before the disposal by the relevant taxpayer, the property was disposed of by another person (in this sub-section referred to as the ‘previous seller’), being the lessee or an associate of the lessee; and
(c) in relation to the disposal of the property by the previous seller, either of the following conditions is satisfied, namely:
(i) the consideration receivable in respect of the disposal by the previous seller was not less than the market value of the unit of property at the time of that disposal; or
(ii) an amount has been or will be included in the assessable income of the previous seller by reason of that disposal, being an amount that is, or is calculated by reference to, the value or market value of the unit of property at the time of that disposal,
no amount shall be included in the assessable income of the relevant taxpayer under this section in relation to the disposal of the unit of property by the relevant taxpayer.
“(12) Where—
(a) apart from this sub-section and sub-sections (9), (10) and (11), an amount would be included in the assessable income of a relevant taxpayer under this section by reason of a disposal by the relevant taxpayer of a unit of property to which this section applies or of an interest in a unit of property to which this section applies; and
(b) the relevant taxpayer acquired the unit of property or the interest, as the case may be, under or by reason of—
(i) a will, a codicil or an order of a court that varied or modified the provisions of a will or a codicil; or
(ii) an intestacy or an order of a court that varied or modified the application, in relation to the estate of a deceased person, of the provisions of the law relating to the distribution of the estates of persons who die intestate,
no amount shall be included in the assessable income of the relevant taxpayer under this section in relation to the disposal of the unit of property or of the interest in the unit of property by the relevant taxpayer.
“(13) Where—
(a) this section applies in relation to a unit of property in relation to a relevant lease agreement that came into operation on or after 22 August 1979;
(b) at any time before the relevant lease agreement came into operation another lease agreement (in this sub-section referred to as the ‘earlier lease agreement’) had been in operation in relation to the unit of property;
(c) the earlier lease agreement came into operation before 22 August 1979 and was in operation on that date or came into operation on or after that date;
(d) the lessor under the relevant lease agreement, or an associate of that lessor, was the lessor under the earlier lease agreement;
(e) the lessee under the relevant lease agreement, or an associate of that lessee, was the lessee under the earlier lease agreement; and
(f) by reason of a disposal of the unit of property by a relevant taxpayer, an amount is required to be included in the assessable income of that relevant taxpayer of a year of income in accordance with sub-section (2) by virtue of the application of that sub-section in relation to the relevant lease agreement,
then, in determining the amount to be so included in the assessable income of that relevant taxpayer as mentioned in paragraph (f), the amounts respectively applicable in accordance with paragraphs (a) and (b) of sub-section (2) shall be increased by any amounts that would be respectively applicable in accordance with those paragraphs if the earlier lease agreement were the relevant lease agreement.
“(14) In this section, unless the contrary intention appears—
‘associate’, in relation to a person (in this definition referred to as the ‘taxpayer’) means—
(a) where the taxpayer is a natural person, other than a taxpayer in the capacity of a trustee—
(i) a relative of the taxpayer;
(ii) a partner of the taxpayer or a partnership in which the taxpayer is a partner;
(iii) if a person who is an associate of the taxpayer by virtue of sub-paragraph (ii) is a natural person—the spouse or a child of that person;
(iv) a trustee of a trust estate where the taxpayer or another person who is an associate of the taxpayer by virtue of another sub-paragraph of this paragraph benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust, either directly or through any interposed companies, partnerships or trusts; or
(v) a company where—
(a) the company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the taxpayer, of another person who is an associate of the taxpayer by virtue of another sub-paragraph of this paragraph, of a company that is an associate of the taxpayer by virtue of another application of this sub-paragraph or of any 2 or more such persons; or
(b) the taxpayer is, the persons who are associates of the taxpayer by virtue of clause (a) and the preceding sub-paragraphs of this paragraph are, or the taxpayer and the persons who are associates of the taxpayer by virtue of that clause and those sub-paragraphs are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the company;
(b) where the taxpayer is a company, other than a taxpayer in the capacity of a trustee—
(i) a partner of the taxpayer or a partnership in which the taxpayer is a partner;
(ii) if a person who is an associate of the taxpayer by virtue of sub-paragraph (i) is a natural person—the spouse or a child of that person;
(iii) a trustee of a trust estate where the taxpayer or another person who is an associate of the taxpayer by virtue of another sub-paragraph of this paragraph benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust, either directly or through any interposed companies, partnerships or trusts;
(iv) another person where—
(a) the taxpayer company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of that person, or of that person and another person or other persons, whether those directions, instructions or wishes are communicated directly to the taxpayer company or its directors, or through any interposed companies, partnerships or trusts; or
(b) that person is, or that person and the persons who, if that person were the taxpayer, would be associates of that person by virtue of paragraph (a), by virtue of clause (a), by virtue of another sub-paragraph of this paragraph or by virtue of paragraph (c) are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the taxpayer company;
(v) another company where—
(a) the other company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the taxpayer company, of a person who is an associate of the taxpayer company by virtue of another sub-paragraph of this paragraph, of a company that is an associate of the taxpayer company by virtue of another application of this sub-paragraph or of any 2 or more such persons; or
(b) the taxpayer company is, the persons who are associates of the taxpayer company by virtue of clause (a) and the other sub-paragraphs of this paragraph are, or the taxpayer company and the persons who are associates of the taxpayer company by virtue of that clause and those sub-paragraphs are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the other company; or
(vi) any other person who, if a third person who is an associate of the taxpayer company by virtue of sub-paragraph (iv) were the taxpayer, would be an associate of that third person by virtue of paragraph (a), by virtue of another sub-paragraph of this paragraph or by virtue of paragraph (c);
(c) where the taxpayer is a trustee of a trust estate—
(i) any person who benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust estate, either directly or through any interposed companies, partnerships or trusts;
(ii) where a person who is an associate of the taxpayer by virtue of sub-paragraph (i) is a natural person—any person who, if that natural person were the taxpayer, would be an associate of that natural person by virtue of paragraph (a) or this paragraph; or
(iii) where a person who is an associate of the taxpayer by virtue of sub-paragraph (i) or (ii) is a company—any person who, if that company were the taxpayer, would be an associate of that company by virtue of paragraph (b) or this paragraph; or
(d) where the taxpayer is a partnership—
(i) a partner in the partnership;
(ii) where any partner in the partnership is a natural person—any person who, if that natural person were the taxpayer, would be an associate of that natural person by virtue of paragraph (a) or (c); or
(iii) where any partner in the partnership is a company— any person who, if the company were the taxpayer, would be an associate of the company by virtue of paragraph (b) or (c);
‘casual hiring agreement’ means an agreement for taking a unit of property on hire where the agreement is of a kind ordinarily entered into by persons taking property on hire intermittently as the occasion requires on an hourly, daily, weekly or monthly basis;
‘consideration receivable’, in relation to a disposal by a person of a unit of property or of an interest in a unit of property, means—
(a) in a case where the unit of property or the interest, as the case may be, is sold by the person otherwise than as mentioned in paragraph (b)—the consideration for the sale less the expenses of the sale;
(b) in the case where the unit of property or the interest, as the case may be, is traded-in by the person in connection with the acquisition by the person of another unit of property or is disposed of by the person in connection with the acquisition by another person of another unit of property—the amount by which the cost of the acquisition of that other unit of property was reduced by reason of the disposal of the first-mentioned unit of property or the interest, as the case may be or, if any consideration other than that reduction in the cost of acquisition of the other unit of property was received or receivable in respect of the disposal of the first-mentioned unit of property, the sum of the amount of the reduction and that other consideration; and
(c) in the case where the unit of property or the interest, as the case may be, is sold by the person with other assets and no separate value is allocated to the unit of property or the interest, as the case may be—the amount determined by the Commissioner;
‘leased’ means let on hire (including a letting on hire that is described in the relevant agreement as a lease) under an agreement other than—
(a) a hire-purchase agreement; or
(b) a casual hiring agreement.
“(15) For the purposes of this section, where—
(a) a person (in this sub-section referred to as the ‘transferor’) acquires property from the person who is the lessor in relation to the relevant lease agreement; and
(b) the transferor acquires the property under an agreement, arrangement or understanding entered into for the purpose, or for purposes that included the purpose, of securing that the property would, directly or indirectly, be acquired by the person who is the lessee in relation to the relevant lease agreement or by an associate of that lessee,
the transferor shall be deemed to be an associate of that lessee.
“(16) In this section, unless the contrary intention appears—
(a) a reference to the cost of a unit of property or of an interest in a unit of property to a person shall be read as a reference to expenditure incurred by that person that is directly attributable to his acquiring ownership of the unit of property or of the interest, as the case may be;
(b) a reference to a person shall be read as including a reference to a partnership;
(c) a reference to the period of an agreement shall be read as including a reference to any period or periods for which the term of the agreement is extended;
(d) a reference to the lessee under a lease agreement, in relation to a time after the expiration of the lease agreement, shall be read as a reference to a person who had been the lessee under that lease agreement;
(e) if 2 or more persons constitute or constituted the lessee under a lease agreement, a reference to the lessee shall be read as a reference to those persons or to either or any of them; and
(f) a reference to an associate of a person shall be read as a reference to a person who was such an associate at any relevant time.
“(17) For the purposes of paragraph (a) of sub-section (16), expenditure of a capital nature incurred by a person in respect of property acquired by the person, being expenditure incurred after the time of acquisition, shall be taken to be expenditure that is directly attributable to the person’s acquiring ownership of the property.
“(18) In this section, a reference to the market value of property at a particular time shall, if there is insufficient evidence of the market value at that time, be read as a reference to such amount as, in the opinion of the Commissioner, is fair and reasonable.”.
(a) by omitting from sub-section (1) “or Division 10b (other than section 124n)” and substituting “, Division 10b (other than section 124n) or Division 10c (other than section 124ze)”;
(b) by omitting from paragraph (w) of sub-section (2) “and” (last occurring); and
(c) by adding at the end of sub-section (2) the following word and paragraph:
“; and (y) where a divisible deduction is allowable to the company in relation to the year of income under Division 10c and the Commissioner considers that the whole or a part of that divisible deduction may appropriately be related to the relevant period, the whole of that divisible deduction or that part of that divisible deduction, as the case may be, shall be deemed to be an allowable deduction in respect of the relevant period.”.
“53h. (1) Conversion costs incurred by a taxpayer on or after 22 August 1979 and before 1 July 1984 shall, subject to this section, be an allowable deduction in respect of the year of income in which the conversion costs were incurred.
“(2) A deduction is not allowable to a taxpayer under this section in respect of conversion costs incurred by the taxpayer in respect of a unit of property unless—
(a) in a case where the conversion costs were incurred otherwise than as is mentioned in paragraph (b)—
(i) the property was in use by the taxpayer in the prescribed manner as at 21 August 1979;
(ii) the property was installed ready for use as at 21 August 1979 for the purpose of being used by the taxpayer in the prescribed manner; or
(iii) in a case to which neither sub-paragraph (i) nor (ii) applies, the property—
(a) was acquired by the taxpayer under a contract entered into on or before 21 August 1979; or
(b) was constructed by the taxpayer, construction having commenced on or before that date,
and the property was acquired by the taxpayer, or constructed by the taxpayer, as the case may be, for the purpose of being used by the taxpayer in the prescribed manner; or
(b) in the case where the conversion costs were incurred in respect of converting or adapting a unit of property that, before the conversion or adaptation, was an LPG unit or was for use principally and directly in connection with the operation of an LPG unit—
(i) the property was in use by the taxpayer in the prescribed manner as at 8 April 1980;
(ii) the property was installed ready for use as at 8 April 1980 for the purpose of being used by the taxpayer in the prescribed manner; or
(iii) in a case to which neither sub-paragraph (i) nor (ii) applies, the property—
(a) was acquired by the taxpayer under a contract entered into on or before 8 April 1980; or
(b) was constructed by the taxpayer, construction having commenced on or before that date,
and the property was acquired by the taxpayer, or constructed by the taxpayer, as the case may be, for the purpose of being used by the taxpayer in the prescribed manner.
“(3) A reference in sub-section (2) to the use of property by a taxpayer in the prescribed manner shall be read as a reference to—
(a) in the case of any taxpayer—the use of the property by the taxpayer wholly and exclusively—
(i) in Australia; and
(ii) for the purpose of producing assessable income otherwise than by—
(a) the leasing of the property;
(b) the letting of the property on hire under a hire-purchase agreement; or
(c) the granting to other persons of rights to use the property; or
(b) in the case of a taxpayer being a leasing company—the use of the property, wholly and exclusively—
(i) in Australia; and
(ii) for the purpose of producing assessable income,
by another person to whom the taxpayer has leased the property under a long-term lease agreement that was entered into by the taxpayer in the course of carrying on a business in Australia and was so entered into by the taxpayer and the other person at arm’s length.
“(4) Subject to sub-section (27), no part of any conversion costs incurred by a taxpayer shall be an allowable deduction, or be taken into account in ascertaining the amount of an allowable deduction, under a provision of this Act other than this section in an assessment of the taxpayer in respect of income of any year of income.
“(5) For the purposes of this Act, but subject to sub-section (27), conversion costs shall be deemed not to be capital expenditure and not to be expenditure of a capital nature.
“(6) This section does not apply, and shall be deemed never to have applied, in relation to conversion costs incurred by a taxpayer in respect of property owned by the taxpayer, not being property that, in the case of a taxpayer being a leasing company, the taxpayer has leased to another person, if, before the expiration of 12 months after the converted property was first used, or installed ready for use, by the taxpayer—
(a) the taxpayer disposed of the property or the property was lost or destroyed;
(b) the taxpayer leased the property, let the property on hire under a hire-purchase agreement or otherwise granted a right to another person to use the property; or
(c) the taxpayer used the property outside Australia or for a purpose other than the purpose of producing assessable income.
“(7) Where—
(a) a deduction has been allowed, or would but for this sub-section be allowable, under this section from the assessable income of a taxpayer of a year of income in relation to conversion costs incurred by the taxpayer in respect of property, not being property that, in the case of a taxpayer being a leasing company, the taxpayer has leased to another person; and
(b) before the expiration of 12 months after the converted property was first used, or installed ready for use, by the taxpayer, the taxpayer disposed of a part of his interest in the property,
so much of the deduction as the Commissioner considers appropriate shall be deemed not to have been, or not to be, allowable, as the case may be.
“(8) This section does not apply, and shall be deemed never to have applied, in relation to conversion costs incurred by a leasing company in respect of property leased by the leasing company to another person (in this sub-section referred to as the ‘lessee’) if, before the expiration of 12 months after the converted property was first used, or installed ready for use, by the lessee and before the expiration of the term of the lease—
(a) the property was disposed of by the leasing company to a person other than the lessee or was lost or destroyed;
(b) the lessee used the property outside Australia or for a purpose other than the purpose of producing assessable income;
(c) the lease was terminated otherwise than by the acquisition of the property by the lessee;
(d) while the lease was in force the lessee entered into a contract or arrangement with another person for the use of the property by that other person;
(e) the lessee acquired the property and disposed of it; or
(f) the lessee acquired the property and entered into a contract or arrangement with another person for the use of the property by that other person.
“(9) This section does not apply and shall be deemed never to have applied in relation to conversion costs incurred by a taxpayer in respect of property leased by the taxpayer to another person (in this sub-section referred to as the ‘lessee’) if, before the property was leased to the lessee by the taxpayer, the lessee entered into a contract or arrangement with another person for the use of the property by that other person.
“(10) Where—
(a) a deduction has been allowed, or would but for this sub-section be allowable, under this section from the assessable income of a taxpayer of a year of income in relation to conversion costs incurred by the taxpayer in respect of property, not being property that, in the case of a taxpayer being a leasing company, the taxpayer has leased to another person;
(b) after the expiration of 12 months after the converted property was first used, or installed ready for use, by the taxpayer—
(i) the taxpayer disposed of the property;
(ii) the taxpayer leased the property, let the property on hire under a hire-purchase agreement or otherwise granted a right to another person to use the property; or
(iii) the taxpayer used the property outside Australia or for a purpose other than the purpose of producing assessable income; and
(c) the Commissioner is satisfied that, at the time when the converted property was first used, or installed ready for use, by the taxpayer, the taxpayer intended to dispose of the property, to lease the property, let the property on hire under a hire-purchase agreement or otherwise grant a right to another person to use the property, or to use the property as mentioned in sub-paragraph (iii) of paragraph (b), after becoming entitled to a deduction under this section in relation to the conversion costs,
the deduction shall, if the Commissioner so determines, be deemed not to have been, or not to be, allowable, as the case may be.
“(11) Where—
(a) a deduction has been allowed, or would but for this sub-section be allowable, under this section from the assessable income of a taxpayer of a year of income in relation to conversion costs incurred by the taxpayer in respect of property, not being property that, in the case of a taxpayer being a leasing company, the taxpayer has leased to another person;
(b) after the expiration of 12 months after the converted property was first used, or installed ready for use, by the taxpayer, the taxpayer disposed of a part of his interest in the property; and
(c) the Commissioner is satisfied that, at the time when the converted property was first used, or installed ready for use, by the taxpayer, the taxpayer intended to dispose of the whole or a part of his interest in the property after becoming entitled to a deduction under this section in relation to the conversion costs,
then, if the Commissioner so determines, so much of the deduction as the Commissioner considers appropriate shall be deemed not to have been, or not to be, allowable, as the case may be.
“(12) Where—
(a) a deduction has been allowed, or would but for this sub-section be allowable, under this section from the assessable income of a taxpayer being a leasing company of a year of income in relation to conversion costs incurred by the taxpayer in respect of property leased by the taxpayer to another person (in this sub-section referred to as the ‘lessee’);
(b) after the expiration of 12 months after the converted property was first used, or installed ready for use, by the lessee and before the expiration of the term of the lease—
(i) the taxpayer disposed of the property to a person other than the lessee;
(ii) the lessee used the property outside Australia or for a purpose other than the purpose of producing assessable income;
(iii) the lease was terminated otherwise than by the acquisition of the property by the lessee;
(iv) while the lease was in force the lessee entered into a contract or arrangement with another person for the use of the property by that other person;
(v) the lessee acquired the property and disposed of it; or
(vi) the lessee acquired the property and entered into a contract or arrangement with another person for the use of the property by that other person; and
(c) the Commissioner is satisfied that, at the time when the converted property was first used, or installed ready for use, by the lessee—
(i) in a case to which sub-paragraph (i) of paragraph (b) applies—the taxpayer intended to dispose of the property to a person other than the lessee before the expiration of the term of the lease; or
(ii) in a case to which sub-paragraph (ii), (iii), (iv), (v) or (vi) of paragraph (b) applies—the lessee intended to use the property as mentioned in sub-paragraph (ii) of that paragraph, to cause the lease to be terminated as mentioned in sub-paragraph (iii) of that paragraph, to enter into a contract or arrangement as mentioned in sub-paragraph (iv) of that paragraph, to acquire and dispose of the property or to acquire the property and enter into a contract or arrangement as mentioned in sub-paragraph (vi) of that paragraph,
the deduction shall, if the Commissioner so determines, be deemed not to have been, or not to be, allowable, as the case may be.
“(13) For the purposes of sub-sections (6), (8), (10) and (12), if a taxpayer who took property on hire under a hire-purchase agreement does or omits to do any act or thing that results in the person (in this sub-section referred to as the ‘owner’) from whom the taxpayer took the property on hire under that agreement obtaining possession of the property—
(a) the taxpayer shall be deemed to have disposed of the property; and
(b) the disposal shall be deemed to have taken place at the time when possession of the property was so obtained by the owner.
“(14) Where—
(a) the individual interest of a taxpayer in the net income of a partnership has been or is to be included in the assessable income of the taxpayer of a year of income (in this sub-section and in sub-section (16) in its application in relation to this sub-section referred to as the ‘relevant year of income’), or the individual interest of a taxpayer in a partnership loss has been allowed or is allowable as a deduction from the assessable income of the taxpayer of a year of income (in this sub-section and in sub-section (16) in its application in relation to this sub-section also referred to as the ‘relevant year of income’);
(b) a deduction (in this sub-section and in sub-section (16) in its application in relation to this sub-section referred to as the ‘relevant deduction’) under this section in relation to conversion costs incurred by the partnership in respect of a unit of property was taken into account in calculating the net income of the partnership, or the partnership loss, as the case may be; and
(c) before the expiration of 12 months after the converted property was first used, or installed ready for use, by the partnership, the taxpayer disposed of the whole or a part of his interest in the partnership or in the property,
there shall be included in the assessable income of the taxpayer of the relevant year of income—
(d) where the taxpayer disposed of the whole of his interest in the partnership or in the property—the prescribed amount; or
(e) in any other case—so much of the prescribed amount as the Commissioner considers appropriate.
“(15) Where—
(a) the individual interest of a taxpayer in the net income of a partnership has been or is to be included in the assessable income of the taxpayer of a year of income (in this sub-section and in sub-section (16) in its application in relation to this sub-section referred to as the ‘relevant year of income’), or the individual interest of a taxpayer in a partnership loss has been allowed or is allowable as a deduction from the assessable income of the taxpayer of a year of income (in this sub-section and in sub-section (16) in its application in relation to this sub-section also referred to as the ‘relevant year of income’);
(b) a deduction (in this sub-section and in sub-section (16) in its application in relation to this sub-section referred to as the ‘relevant deduction’) under this section in relation to conversion costs incurred by the partnership in respect of a unit of property was taken into account in calculating the net income of the partnership, or the partnership loss, as the case may be; and
(c) after the expiration of 12 months after the converted property was first used, or installed ready for use, by the partnership, the taxpayer disposed of the whole or a part of his interest in the partnership or in the property,
and the Commissioner is satisfied that, at the time when the converted property was first used, or installed ready for use, by the partnership, the taxpayer intended to dispose of the whole or a part of his interest in the partnership or in the property after the partnership became entitled to a deduction under this section, there shall, if the Commissioner so determines, be included in the assessable income of the taxpayer of the relevant year of income—
(d) where the taxpayer disposed of the whole of his interest in the partnership or in the property—the prescribed amount; or
(e) in any other case—so much of the prescribed amount as the Commissioner considers appropriate.
“(16) For the purposes of sub-sections (14) and (15), the prescribed amount is—
(a) where the relevant deduction related to conversion costs incurred by the partnership in respect of the relevant property and the partners have agreed as to the amount of those conversion costs to be borne by the taxpayer—an amount that bears to the amount of the relevant deduction the same proportion as so much of the amount of those conversion costs as the partners agreed was to be borne by the taxpayer bears to the amount of those conversion costs; or
(b) in any other case—an amount that bears to the amount of the relevant deduction the same proportion as the individual interest of the taxpayer in the net income of the partnership of the year of income of the partnership that corresponds to the relevant year of income bears to that net income or, as the case requires, as the individual interest of the taxpayer in the partnership loss for the corresponding year of income of the partnership bears to that partnership loss.
“(17) In calculating the net income of a partnership, or a partnership loss, in accordance with section 90, regard shall not be had to the provisions of this section in so far as they apply to conversion costs incurred by the partnership in respect of property that is leased by the partnership to another person, but, where a partnership in which any one or more of the partners is a leasing company has incurred such conversion costs, then, for the purposes of the application of this section in respect of such a partner, that partner shall be deemed to have incurred—
(a) so much of the amount of those conversion costs as the partners have agreed is to be borne by that partner; or
(b) if the partners have not agreed as to the part of that amount that is to be borne by that partner—so much of that amount as bears to that amount the same proportion as the individual interest of the partner in the net income of the partnership of the year of income in which the conversion costs were incurred bears to that net income or, as the case requires, as the individual interest of the partner in the partnership loss for that year of income bears to that partnership loss.
“(18) Where—
(a) a deduction has been allowed, or would but for this sub-section be allowable, under this section from the assessable income of a taxpayer being a leasing company in relation to conversion costs incurred by a partnership in which the taxpayer is a partner in respect of property that is leased by the partnership to another person (in this sub-section referred to as the ‘lessee’); and
(b) before the expiration of 12 months after the converted property was first used, or installed ready for use, by the lessee and before the expiration of the term of the lease, the taxpayer disposed of the whole or a part of his interest in the partnership or in the property otherwise than to the lessee,
then—
(c) where the taxpayer disposed of the whole of his interest in the partnership or in the property—the deduction shall be deemed not to have been, or not to be, allowable, as the case may be; or
(d) in any other case—so much of the deduction as the Commissioner considers appropriate shall be deemed not to have been, or not to be, allowable, as the case may be.
“(19) Where—
(a) a deduction has been allowed, or would but for this sub-section be allowable, under this section from the assessable income of a taxpayer being a leasing company in relation to conversion costs incurred by a partnership in which the taxpayer is a partner in respect of property that is leased by the partnership to another person (in this sub-section referred to as the ‘lessee’);
(b) after the expiration of 12 months after the converted property was first used, or installed ready for use, by the lessee and before the expiration of the term of the lease, the taxpayer disposed of the whole or a part of his interest in the partnership or in the property otherwise than to the lessee; and
(c) the Commissioner is satisfied that, at the time when the converted property was first used, or installed ready for use, by the lessee, the taxpayer intended to dispose of the whole or a part of his interest in the partnership or in the property after becoming entitled to a deduction under this section in relation to the conversion costs,
then, if the Commissioner so determines—
(d) where the taxpayer disposed of the whole of his interest in the partnership or in the property—the deduction shall be deemed not to have been, or not to be, allowable, as the case may be; or
(e) in any other case—so much of the deduction as the Commissioner considers appropriate shall be deemed not to have been, or not to be, allowable, as the case may be.
“(20) This section does not apply, and shall be deemed never to have applied, in relation to conversion costs incurred by a partnership in respect of property leased by the partnership to another person (in this sub-section referred to as the ‘lessee’) if, before the expiration of 12 months after the converted property was first used, or installed ready for use, by the lessee and before the expiration of the term of the lease—
(a) the property was disposed of by the partnership to a person other than the lessee or was lost or destroyed;
(b) the lessee used the property outside Australia or for a purpose other than the purpose of producing assessable income;
(c) the lease was terminated otherwise than by the acquisition of the property by the lessee;
(d) while the lease was in force the lessee entered into a contract or arrangement with another person for the use of the property by that other person;
(e) the lessee acquired the property and disposed of it; or
(f) the lessee acquired the property and entered into a contract or arrangement with another person for the use of the property by that other person.
“(21) This section does not apply, and shall be deemed never to have applied, in relation to conversion costs incurred by a partnership in respect of property leased by the partnership to another person (in this sub-section referred to as the ‘lessee’) if, before the property was leased to the lessee by the partnership, the lessee entered into a contract or arrangement with another person for the use of the property by that other person.
“(22) Where—
(a) a deduction has been allowed, or would but for this sub-section be allowable, under this section from the assessable income of a taxpayer being a leasing company in relation to conversion costs incurred by a partnership in which the taxpayer is a partner in respect of property that is leased by the partnership to another person (in this sub-section referred to as the ‘lessee’);
(b) after the expiration of 12 months after the converted property was first used, or installed ready for use, by the lessee and before the expiration of the term of the lease—
(i) the property was disposed of by the partnership to a person other than the lessee;
(ii) the lessee used the property outside Australia or for a purpose other than the purpose of producing assessable income;
(iii) the lease was terminated otherwise than by the acquisition of the property by the lessee;
(iv) while the lease was in force the lessee entered into a contract or arrangement with another person for the use of the property by that other person;
(v) the lessee acquired the property and disposed of it; or
(vi) the lessee acquired the property and entered into a contract or arrangement with another person for the use of the property by that other person; and
(c) the Commissioner is satisfied that, at the time when the converted property was first used, or installed ready for use, by the lessee—
(i) in a case to which sub-paragraph (i) of paragraph (b) applies—the partnership intended to dispose of the property to a person other than the lessee before the expiration of the term of the lease; or
(ii) in a case to which sub-paragraph (ii), (iii), (iv), (v) or (vi) of paragraph (b) applies—the lessee intended to use the property as mentioned in sub-paragraph (ii) of that paragraph, to cause the lease to be terminated as mentioned in sub-paragraph (iii) of that paragraph, to enter into a contract or arrangement as mentioned in sub-paragraph (iv) of that paragraph, to acquire and dispose of the property or to acquire the property and to enter into a contract or arrangement as mentioned in sub-paragraph (vi) of that paragraph,
the deduction shall, if the Commissioner so determines, be deemed not to have been, or not to be, allowable, as the case may be.
“(23) Paragraph (a) of sub-section (6) does not apply in relation to a disposal of property by a taxpayer being a company, being a disposal occurring before the expiration of the period of 12 months after the date on which the converted property was first used, or installed ready for use, by the taxpayer, if—
(a) the disposal by the taxpayer was to another company (in this sub-section referred to as the ‘transferee’) that was, at the time of the disposal, related to the taxpayer;
(b) the property was not, at any time (in this paragraph referred to as the ‘relevant time’) during that period of 12 months, owned by a person other than—
(i) in a case where the transferee was the holding company of the taxpayer—the transferee or a company related to the transferee at the relevant time;
(ii) in a case where the transferee was a wholly-owned subsidiary of the taxpayer—the taxpayer or a company related to the taxpayer at the relevant time;
(iii) in a case where the transferee was a wholly-owned subsidiary of another company (in this sub-paragraph referred to as the ‘holding company’) of which the taxpayer was also a wholly-owned subsidiary—the holding company or a company related to the holding company at the relevant time; or
(iv) in a case where the transferee was a wholly-owned subsidiary of other companies (in this sub-paragraph referred to as the ‘parent companies’) of which the taxpayer was also a wholly-owned subsidiary—a company that, at the relevant time, was a wholly-owned subsidiary of the parent companies;
(c) at any time during that period of 12 months when the property was owned by—
(i) in a case where the transferee was the holding company of the taxpayer—the transferee;
(ii) in a case where the transferee was a wholly-owned subsidiary of the taxpayer—the taxpayer; or
(iii) in a case where the transferee was a wholly-owned subsidiary of another company of which the taxpayer was also a wholly-owned subsidiary—that other company,
the transferee, the taxpayer, or that other company, as the case may be, was an eligible public company in relation to the year of income in which that time occurred; and
(d) at no time during that period of 12 months did a person who owned the property—
(i) lease the property, let the property on hire under a hire-purchase agreement or otherwise grant a right to another person to use the property; or
(ii) use the property outside Australia or for a purpose other than the purpose of producing assessable income.
“(24) Sub-sections (2) to (8) of section 82aja apply for the purposes of sub-section 23 of this section in like manner as those sub-sections apply for the purposes of sub-section (1) of section 82aja.
“(25) Where a deduction has been allowed, or would but for this sub-section be allowable, under this section from the assessable income of a taxpayer in relation to conversion costs incurred by the taxpayer in respect of a unit of property (in this sub-section referred to as the ‘converted unit’) and, before 1 July 1984—
(a) a petroleum unit was acquired or constructed, or taken on lease, by the taxpayer as a replacement or substitute for the converted unit; or
(b) the converted unit was converted or adapted for use as a petroleum unit,
the deduction shall be deemed not to have been, or not to be, allowable, as the case may be.
“(26) For the purposes of the application of sub-section (25), ‘petroleum unit’ means a unit of property, not being mobile property, that requires energy for the performance of the function, or some or all of the functions, for which it was designed, and is designed to obtain that energy directly, and solely or principally, from the combustion of—
(a) in a case where the converted property referred to in sub-section (25) was, after the relevant conversion or adaptation, an LPG unit— petroleum or a product obtained by refining petroleum, not being petroleum of a kind, or such a product of a kind, that is in a gaseous state at a temperature of 15 degrees Celsius and a pressure of 1 atmosphere; and
(b) in any other case—petroleum or a product obtained by refining petroleum, not being—
(i) petroleum of a kind of which not less than 80% by volume is methane; or
(ii) a product derived from petroleum of the kind referred to in sub-paragraph (i);
“(27) Where, by reason of the operation of any of the preceding provisions of this section—
(a) a deduction, or part of a deduction, in relation to conversion costs is deemed not to have been, or not to be, allowable; or
(b) this section does not apply and is deemed never to have applied in respect of conversion costs incurred by a taxpayer,
sub-sections (4) and (5) do not apply in relation to—
(c) in a case where a part only of the deduction in relation to the conversion costs is deemed not to have been, or not to be, allowable—so much of the conversion costs as is equal to that part; and
(d) in any other case—the conversion costs.
“(28) Where property that is owned or has been taken on lease by a taxpayer being a private company is used at any time for private or domestic purposes by—
(a) an employee of the company;
(b) a director of the company;
(c) a member of the company; or
(d) a relative of a person referred to in paragraph (a), (b) or (c),
the property shall be deemed for the purposes of this section to have been used at that time by the company for a purpose other than the purpose of producing assessable income.
“(29) This section does not apply, and shall be deemed never to have applied, in relation to a taxpayer, to conversion costs in respect of which the taxpayer is recouped, or becomes entitled to be recouped, by the Commonwealth, by a State, by a Territory, by an authority constituted by or under a law of the Commonwealth, of a State or of a Territory or by any other person and, where a taxpayer receives, or becomes entitled to receive, an amount that constitutes to an unspecified extent a recoupment of conversion costs in respect of a unit of property, the Commissioner may, for the purposes of this sub-section, determine the extent to which the amount constitutes a recoupment of that expenditure.
“(30) In this section, unless the contrary intention appears—
‘conversion costs’ in relation to a taxpayer, means expenditure incurred by the taxpayer—
(a) in converting or adapting an oil-fired unit to operate as a non-oil-fired unit; or
(b) in converting or adapting a unit of property, not being mobile property, for use principally and directly in connection with the operation of—
(i) a unit of property in respect of which the taxpayer or another person has incurred conversion costs of the kind to which paragraph (a) or this paragraph applies, being conversion costs in respect of which a deduction has been allowed or is allowable to the taxpayer or that other person under this section; or
(ii) a unit of property that has been acquired or constructed, or taken on lease, by the taxpayer, being a unit of property in respect of which a deduction has been allowed or is allowable under Subdivision BB of Division 3 of Part III to—
(a) in a case where the taxpayer acquired or constructed the property—the taxpayer or a person to whom the taxpayer leased the property; or
(b) in a case where the property was taken on lease by the taxpayer—the taxpayer or the person from whom the property was taken on lease by the taxpayer,
being expenditure that—
(c) was incurred in respect of a conversion or adaptation effected by the taxpayer, the conversion or adaptation having commenced on or after 22 August 1979; or
(d) in a case to which paragraph (c) does not apply—was incurred under a contract entered into on or after 22 August 1979;
‘lease’, in relation to property, means grant a lease of the property or let the property on hire otherwise than under a hire-purchase agreement;
‘leasing company’ has the same meaning as in Subdivision B of Division 3 of Part III;
‘liquid petroleum gas’ means petroleum or a product obtained by refining petroleum, being petroleum or such a product that—
(a) consists principally of propane or butane or of a mixture of propane and butane; and
(b) is in a gaseous state at a temperature of 15 degrees Celsius and a pressure of 1 atmosphere;
‘LPG unit’ means plant or an article within the meaning of section 54 that—
(a) requires energy for the performance of the function, or some or all of the functions, for which it was designed; and
(b) is designed to obtain, and customarily obtains, that energy directly, and solely or principally, from the combustion of liquid petroleum gas;
‘long-term lease agreement’ has the same meaning in relation to property as in Subdivision B of Division 3 of Part III;
‘mobile property’ means property that during the performance of the function, or some or all of the functions, for which it was designed, is not stationary at all times with respect to its points of contact with the surface or structure upon which it stands or is located but does not include property that forms part of a plant installation that is permanently located in a fixed position;
‘non-oil-fired unit’ means a unit of property (not being mobile property) that—
(a) requires energy for the performance of the function, or some or all of the functions, for which it was designed; and
(b) is designed to obtain, and customarily obtains, that energy directly, and solely or principally, from a source other than the combustion of a petroleum product;
‘unit of property’, in relation to a taxpayer, means plant or an article within the meaning of section 54 not being trading stock of the taxpayer.
“(31) Subject to sub-section (32), ‘petroleum product’ means petroleum or a product obtained by refining petroleum, but does not include—
(a) petroleum of a kind of which not less than 80% by volume is methane; or
(b) a product derived from petroleum of the kind referred to in paragraph (a).
“(32) For the purposes of the application of this section in relation to expenditure incurred by a taxpayer in respect of the conversion or adaptation of a unit of property to operate as a non-oil-fired unit or for use principally and directly as mentioned in paragraph (b) of the definition of ‘conversion costs’ in sub-section (30), being expenditure that—
(a) was incurred before 9 April 1980; or
(b) not having been incurred before 9 April 1980, was incurred—
(i) in respect of a conversion or adaptation effected by the taxpayer, the conversion or adaptation having commenced before that date; or
(ii) under a contract entered into by the taxpayer before that date,
‘petroleum product’ means petroleum or a product obtained by refining petroleum but does not include petroleum of a kind, or such a product of a kind, that is in a gaseous state at a temperature of 15 degrees Celsius and a pressure of 1 atmosphere.
“(33) For the purposes of the application of this section in relation to conversion costs incurred by a taxpayer, a unit of property shall be taken to be an oil-fired unit if, not being mobile property, the unit of property requires energy for the performance of the function, or some or all of the functions, for which it was designed and—
(a) the unit of property is designed to obtain that energy directly, and solely or principally, from the combustion of a petroleum product and—
(i) in a case where the unit of property is a unit of property to which paragraph (a) of sub-section (3) applies—the Commissioner is satisfied that, if the unit of property was used by the taxpayer at any time before the commencement of the conversion or adaptation in respect of which the conversion costs were incurred, the unit of property, at that time, obtained that energy directly, and solely or principally, from the combustion of a petroleum product; or
(ii) in a case where the unit of property is a unit of property to which paragraph (b) of sub-section (3) applies—the Commissioner is satisfied that, if the unit of property was used by the person to whom the taxpayer leased the property at any time before the commencement of the conversion or adaptation in respect of which the conversion costs were incurred, the unit of property, at that time, obtained that energy directly, and solely or principally, from the combustion of a petroleum product;
(b) in a case to which paragraph (a) of this sub-section does not apply— the unit of property is a unit of property to which paragraph (a) of sub-section (3) applies and the Commissioner is satisfied that—
(i) before the commencement of the conversion or adaptation in respect of which the conversion costs were incurred, the unit of property was used by the taxpayer; and
(ii) at all times when the property was used by the taxpayer before the commencement of that conversion or adaptation, the unit of property obtained that energy directly, and solely or principally, from the combustion of a petroleum product; or
(c) in a case to which paragraph (a) of this sub-section does not apply— the unit of property is a unit of property to which paragraph (b) of sub-section (3) applies and the Commissioner is satisfied that—
(i) before the commencement of the conversion or adaptation in respect of which the conversion costs were incurred, the unit of property was used by the person to whom the taxpayer leased the property; and
(ii) at all times before the commencement of that conversion or adaptation when the property was used by the person to whom the taxpayer leased the property, the unit of property obtained that energy directly, and solely or principally, from the combustion of a petroleum product.
“(34) For the purposes of this section—
(a) a person shall be taken to be the owner of any property that is held on hire by the person under a hire-purchase agreement; and
(b) a reference in this section to the acquisition of property by the person shall be read as a reference to the person becoming the owner of the property.
“(35) A reference in this section to a unit of property being installed ready for use by a person shall be read as a reference to the property being installed ready for use by that person and held in reserve.
“(36) For the purposes of the application of this section in relation to conversion costs incurred by a taxpayer in respect of a unit of property, a reference in this section to the converted property being first used or installed ready for use by the taxpayer or by another person shall be read as a reference to the property being first used or installed ready for use by the taxpayer or that other person, as the case may be, after the completion of the conversion or adaptation in respect of which the conversion costs were incurred.
“(37) For the purposes of the application of the definition of ‘conversion costs’ in sub-section (30), a reference in sub-paragraph (ii) of paragraph (b) of that definition to a deduction having been allowed, or being allowable to a taxpayer in respect of property under Subdivision BB of Division 3 of Part III shall, in a case where the taxpayer is a partnership, be read as including a reference to a deduction having been allowed, or being allowable, under that Subdivision in respect of that property to a partner in the partnership.”.
(a) by inserting in paragraph (b) of sub-section (4) “and section 57af” after “this sub-section”;
(b) by inserting in paragraph (d) of sub-section (4) “and section 57af” after “but for this sub-section”; and
(c) by inserting in sub-section (4) “, subject to section 57af,” before “be deemed to be”.
“57af. (1) This section applies in relation to a unit of property (other than an excluded unit of property) being—
(a) a unit of property in respect of which depreciation is allowable under this Act; and
(b) a motor vehicle (including a vehicle known as a four wheel drive vehicle) that is a motor car or station wagon.
“(2) Where the cost of a unit of property to which this section applies for the purpose of calculating the depreciation allowable to a taxpayer under this Act in relation to a year of income would, apart from this sub-section, exceed the motor vehicle depreciation limit in relation to the year of income (in this sub-section referred to as the ‘year of first use’) in which the unit of property was first used by the taxpayer (whether for the purpose of producing assessable income or otherwise), then, for the purpose of calculating the depreciation allowable under this Act to the taxpayer in relation to a year of income, the cost of that unit of property shall be deemed to be the amount of the motor vehicle depreciation limit in relation to the year of first use.
“(3) Subject to sub-section (4), the motor vehicle depreciation limit in relation to a year of income is $18,000.
“(4) Subject to sub-section (5), sub-section (3) has effect, in relation to a relevant year of income, as if, for the reference in that sub-section to $18,000, there were substituted a reference to an amount calculated by multiplying—
(a) in a case to which paragraph (b) does not apply—$18,000; or
(b) where sub-section (3) has had effect in relation to a year of income or years of income preceding the relevant year of income as if a reference to another amount were substituted for the reference in that sub-section to $18,000 or would have so had effect but for the operation of sub-section (5)—the substituted amount or the last substituted amount, or the amount or the last amount that would, but for the operation of sub-section (5), have been so substituted, as the case may be,
by the factor ascertained in accordance with sub-section (6).
“(5) Sub-section (4) does not have effect in relation to a relevant year of income where, if it did so have effect, the motor vehicle depreciation limit in relation to that relevant year of income would not exceed $18,000.
“(6) The factor to be ascertained for the purposes of sub-section (4) in relation to a relevant year of income is the number (calculated to 3 decimal places) ascertained, as at the date on which the index number for the March quarter immediately preceding that relevant year of income was first published, by dividing the sum of—
(a) the index number in respect of the March quarter immediately preceding that relevant year of income; and
(b) the index numbers in respect of the 3 quarters that immediately preceded that quarter,
by the sum of—
(c) the index number in respect of the March quarter immediately preceding the year of income that next preceded that relevant year of income; and
(d) the index numbers in respect of the 3 quarters that immediately preceded that last-mentioned quarter.
“(7) Subject to sub-section (8), if at any time, whether before or after the commencement of this section, the Australian Statistician has published or publishes an index number in respect of a quarter in substitution for an index number previously published by him in respect of that quarter, the publication of the later index number shall be disregarded for the purposes of this section.
“(8) If, at any time, whether before or after the commencement of this section, the Australian Statistician has changed or changes the reference base for the motor vehicle purchase sub-group of the Consumer Price Index, then, for the purposes of the application of this section after the change took place or takes place, regard shall be had only to index numbers published in terms of the new reference base.
“(9) Where the factor ascertained in accordance with sub-section (6) in relation to a relevant year of income would, if it were calculated to 4 decimal places, end with a number greater than 4, the factor ascertained in accordance with that sub-section in relation to that relevant year of income shall be taken to be the factor calculated to 3 decimal places in accordance with that sub-section and increased by 0.001.
“(10)
The Treasurer shall cause to be published in the
(a) the factor ascertained in accordance with sub-section (6) (as affected by sub-section (9)) in relation to that year of income; and
(b) the amount that is to be the motor vehicle depreciation limit in relation to that year of income for units of property to which this section applies.
“(11) Where, but for this sub-section, this section would, by virtue of the preceding provisions of this section, have effect in relation to a relevant year of income as if, for the reference in sub-section (3) to $18,000, there were substituted a reference to another amount, being an amount that consists of a number of whole dollars and a number of cents (in this sub-section referred to as the ‘relevant number of cents’)—
(a) in the case where the relevant number of cents is less than 50—the other amount shall be reduced by the relevant number of cents; or
(b) in any other case—the other amount shall be increased by the amount by which the relevant number of cents is less than $1.
“(12) Where, but for sub-section (5), this section would, by virtue of the preceding provisions of this section, have effect in relation to a relevant year of income as if, for the reference in sub-section (3) to $18,000, there were substituted a reference to another amount, being an amount that consists of a number of whole dollars and a number of cents (in this sub-section referred to as the ‘relevant number of cents’) then, for the purposes of the application of paragraph (b) of sub-section (4)—
(a) in a case where the relevant number of cents is less than 50—the other amount shall be reduced by the relevant number of cents; or
(b) in any other case—the other amount shall be increased by the amount by which the relevant number of cents is less than $1.
“(13) Where—
(a) a taxpayer disposes of a unit of property (in this sub-section referred to as the ‘first unit of property’) by sale for a consideration the amount or value of which (in this sub-section referred to as the ‘reduced disposal price’) is, in the opinion of the Commissioner, less than the market value of the first unit of property immediately before the time of disposal;
(b) depreciation under this Act has been allowed or is allowable to the taxpayer in relation to the first unit of property;
(c) the cost to the taxpayer or another person (in this sub-section referred to as the ‘discounted cost’) of acquiring ownership of another unit of property (in this sub-section referred to as the ‘second unit of property’), being a unit of property to which this section applies, is less than the amount that would otherwise have been the cost to the taxpayer or that other person of acquiring ownership of the second unit of property by reason of the allowance of a discount (in this sub-section referred to as the ‘cost price discount’);
(d) the Commissioner is satisfied, having regard to all the circumstances, that the whole or a part of the cost price discount (which whole or part, as the case may be, is in this sub-section referred to as the ‘relevant discount amount’) was based on, directly or indirectly referable to, or fixed by reason of, the reduced disposal price of the first unit of property being less than the market value of the first unit of property immediately before the time of disposal; and
(e) the sum of the discounted cost and the relevant discount amount is greater than the motor vehicle depreciation limit in relation to the year of income in which the second unit of property was first used by the taxpayer or that other person (whether for the purpose of producing assessable income or otherwise),
the discounted cost in relation to the second unit of property for the purposes of the application of the provisions of this Act relating to depreciation and the sale price of the first unit of property for the purposes of section 59 shall each be deemed to be increased by the relevant discount amount.
“(14) In this section, a reference to the market value of property at a particular time shall, if there is insufficient evidence of the market value at that time, be read as a reference to such amount as, in the opinion of the Commissioner, is fair and reasonable.
“(15) In this section—
‘discount’, in relation to the acquisition of a unit of property, includes any allowance that has the effect of reducing the price payable for the acquisition of the unit of property;
‘excluded unit of property’, in relation to a taxpayer, means—
(a) a unit of property that was acquired by the taxpayer on or before 21 August 1979 or under a contract entered into on or before that date;
(b) a unit of property that was constructed by the taxpayer where the construction commenced on or before 21 August 1979; or
(c) a unit of property that was acquired by the taxpayer after 21 August 1979 where—
(i) the unit of property had been acquired by a person on or before that date or under a contract entered into on or before that date; and
(ii) at all times after the unit of property was acquired by that person and before it was acquired by the taxpayer, the owner for the time being of the unit of property held the unit of property as trading stock;
‘index number’ in relation to a quarter, means the index number for the motor vehicle purchase sub-group of the Consumer Price Index, being the weighted average of the six State capital cities, published by the Australian Statistician in respect of that quarter;
‘relevant year of income’ means the year of income commencing on 1 July 1980 or a subsequent year of income.”.
(a) by omitting from sub-section (3) “sub-section (4)” and substituting “sub-sections (4) and (6)”;
(b) by inserting after sub-section (4) the following sub-section:
“(4a) Where section 57af has applied for the purpose of calculating the depreciation allowable in respect of a unit of property, the reference in sub-section (4) of this section to the depreciated value of the property immediately before the time of disposal shall be read as a reference to the depreciated value of the property calculated as if the reference in paragraph (b) of sub-section (1) of section 56 and in sub-section (1) of section 62 to the cost of the unit of property were a reference to the amount that, for the purposes of the application of sub-section (6) of this section in relation to the disposal, is applicable for the purposes of component C of the formula in that last-mentioned sub-section.”; and
“(20) For the purposes of determining whether a deduction is allowable under this Division, in respect of an amount of qualifying apartment expenditure in respect of building, to a taxpayer who, during the whole or a part of a year of income (which whole or part, as the case may be, is in this sub-section referred to as the ‘relevant period’) was the owner of the whole or of a part of the apartment part, where—
(a) during the whole or a part of the relevant period, the taxpayer owned or leased an apartment, unit or flat in the building; and
(b) during the relevant period or that part of the relevant period, as the case may be, that apartment, unit or flat was used, or made available for use, principally for the provision of short-term accommodation for travellers,
that apartment, unit or flat shall be taken to have been used, or made available for use, wholly for the provision of short-term accommodation for travellers during—
(c) in a case to which paragraph (a) applies—the whole of the relevant period; or
(d) in a case to which paragraph (b) applies—during the whole of the part of the relevant period referred to in that paragraph.
“(21) For the purposes of the application of this Division in determining the amount of a deduction allowable under section 124zc or 124ze in respect of an amount of qualifying expenditure in respect of a building, a person who, at a particular time (in this sub-section referred to as the ‘relevant time’), is an eligible lessee in relation to that amount of qualifying expenditure shall, subject to sub-section (24), be taken at the relevant time to be the owner of so much of the building as satisfies the following conditions, namely:
(a) is leased by the person at that time;
(b) is a part of the building to which the whole or a part of the amount of qualifying expenditure is attributable; and
(c) was, at all times after the completion of the relevant construction and before the relevant time, leased and was not, at any time after completion of the relevant construction and before the relevant time, leased by a person who was not an eligible lessee in relation to that amount of qualifying expenditure.
“(22) Where, for the purposes of the application of this Division in determining the amount of a deduction allowable under section 124zc or 124ze, in respect of an amount of qualifying expenditure, a person is deemed by sub-section (21) to be the owner of a building or of a part of a building at a particular time, no other person shall be taken to be the owner of the building or of that part of the building, as the case may be, at that time, for the purposes of the application of the provisions of this Division, other than paragraph (a) of sub-section (5), in determining the amount of a deduction allowable under section 124zc or 124ze in respect of that amount of qualifying expenditure.
“(23) In this Division, a reference, in relation to an amount of qualifying expenditure, to the relevant construction shall be read as a reference to the construction of the building, or of the extension, alteration or improvement, as the case may be, to which the amount of qualifying expenditure is attributable.
“(24) Where—
(a) during the whole or a part of a year of income (which whole or part, as the case may be, is in this sub-section referred to as the ‘relevant period’) a taxpayer was the owner of a particular part (in this sub-section referred to as the ‘relevant part’) of the hotel part or apartment part in relation to an amount of qualifying expenditure; and
(b) during a part only of the relevant period the taxpayer was also the owner of another part of that hotel part or apartment part, as the case may be,
then, for the purposes of the application of this Division in relation to the taxpayer in relation to the relevant part (other than an application of this Division in relation to the whole of the hotel part or apartment part, as the case may be, or in relation to a part of the hotel part or apartment part, as the case may be, of which the relevant part is only a part), the taxpayer shall not be taken to have been the owner of the relevant part at any time during the part of the relevant period referred to in paragraph (b).
“124zb. (1) Subject to this section, where—
(a) a person has incurred expenditure of a capital nature in respect of the construction of a building in Australia or in respect of the construction of an extension, alteration or improvement to a building in Australia;
(b) at the time when that expenditure was incurred—
(i) the building or the extension, alteration or improvement, as the case may be, was to be owned or leased by that person; or
(ii) a part only of the building or of the extension, alteration or improvement, as the case may be, was to be owned or leased by that person;
(c) the building or the extension, alteration or improvement, as the case may be, commenced to be constructed after 21 August 1979 and construction of the building or of that extension, alteration or improvement, as the case may be, has been completed; and
(d) at the time of completion of construction of the building, or of the extension, alteration or improvement, as the case may be—
(i) in a case to which sub-paragraph (i) of paragraph (b) applies—
(a) the building, or the extension, alteration or improvement, as the case may be, was for use (whether by that person or by another person or persons) wholly or principally for the purpose of operating a hotel, motel or guest house that, at that time, contained not fewer than 10 bedrooms that were for use wholly or principally for the provision of short-term accommodation for travellers; or
(b) a part (in this clause referred to as the ‘relevant part’) of the building, or of the extension, alteration or improvement, as the case may be, was for use as mentioned in clause (a); or
(ii) in a case to which sub-paragraph (ii) of paragraph (b) applies—
(a) the whole (in this clause referred to as the ‘relevant part’) of the part of the building, extension, alteration or improvement, as the case may be, to which that sub-paragraph applies, was for use as mentioned in clause (a) of sub-paragraph (i); or
(b) a part (in this clause referred to as the ‘relevant part’) of the part of the building, extension, alteration or improvement, as the case may be, to which that sub-paragraph applies was for use as mentioned in clause (a) of sub-paragraph (i),
then, for the purposes of this Division—
(e) in a case to which clause (a) of sub-paragraph (i) of paragraph (d) applies—the amount of the capital expenditure referred to in paragraph (a) shall be taken to be an amount of qualifying hotel expenditure in respect of the building; and
(f) in a case to which clause (b) of sub-paragraph (i) of paragraph (d), clause (a) of sub-paragraph (ii) of paragraph (d) or clause (b) of sub-paragraph (ii) of paragraph (d) applies—so much of the amount of the capital expenditure referred to in paragraph (a) as is attributable to the relevant part referred to in whichever of those clauses is applicable shall be taken to be an amount of qualifying hotel expenditure in respect of the building.
“(2) Subject to this section, where—
(a) a person has incurred expenditure of a capital nature in respect of the construction of a building in Australia or in respect of the construction of an extension, alteration or improvement to a building in Australia;
(b) the building or the extension, alteration or improvement, as the case may be, commenced to be constructed after 21 August 1979 and construction of the building or of the extension, alteration or improvement, as the case may be, has been completed;
(c) at the time of completion of construction of the building, or of the extension, alteration or improvement, as the case may be—
(i) the building consisted of 10 or more apartments, units or flats each of which was, at that time, for use wholly or principally for the provision of short-term accommodation for travellers;
(ii) the building consisted of—
(A) 10 or more apartments, units or flats each of which was, at that time, for use wholly or principally for the provision of short-term accommodation for travellers; and
(B) facilities wholly or principally for use in association with the provision of short-term accommodation for travellers in those apartments, units or fiats;
(iii) a part of the building consisted of 10 or more apartments, units or flats each of which was, at that time, for use wholly or principally for the provision of short-term accommodation for travellers; or
(iv) a part of the building consisted of—
(a) 10 or more apartments, units or flats each of which was, at that time, for use wholly or principally for the provision of short-term accommodation for travellers; and
(b) facilities wholly or principally for use in association with the provision of short-term accommodation for travellers in those apartments, units or flats; and
(d) at the time when that expenditure was incurred—
(i) the building or the extension, alteration or improvement, as the case may be, was to be owned or leased by that person; or
(ii) a part only of the building or of the extension, alteration or improvement, as the case may be, was to be owned or leased by that person,
then, for the purposes of this Division—
(e) in a case to which sub-paragraph (i) or (ii) of paragraph (c) applies and to which sub-paragraph (i) of paragraph (d) applies—the amount of the capital expenditure referred to in paragraph (a) shall be taken to be an amount of qualifying apartment expenditure in respect of the building;
(f) in a case to which sub-paragraph (i) or (ii) of paragraph (c) applies and to which sub-paragraph (ii) of paragraph (d) applies—so much of the amount of the capital expenditure referred to in paragraph (a) as is attributable to the part of the building referred to in sub-paragraph (ii) of paragraph (d) shall be taken to be an amount of qualifying apartment expenditure in respect of the building;
(g) in a case to which sub-paragraph (iii) or (iv) of paragraph (c) applies and to which sub-paragraph (i) of paragraph (d) applies—so much of the amount of the capital expenditure referred to in paragraph (a) as is attributable to the part of the building referred to in sub-paragraph (iii) of paragraph (c) or sub-paragraph (iv) of paragraph (c), as the case may be, shall be taken to be an amount of qualifying apartment expenditure in respect of the building; and
(h) in a case to which sub-paragraph (iii) or (iv) of paragraph (c) applies and to which sub-paragraph (ii) of paragraph (d) applies—so much of the amount of the capital expenditure referred to in paragraph (a) as is attributable to the part of the building referred to in sub-paragraph (iii) of paragraph (c) or sub-paragraph (iv) of paragraph (c), as the case may be, and is also attributable to the part of the building referred to in sub-paragraph (ii) of paragraph (d) shall be taken to be an amount of qualifying apartment expenditure in respect of the building.
“(3) References in sub-section (1) or (2) to expenditure of a capital nature incurred in respect of the construction of a building, or of an extension, alteration or improvement to a building, shall be read as not including references to expenditure in respect of any property in respect of which depreciation is allowable under section 54.
“124zc. (1) Subject to this section and section 124zd, where—
(a) there is an amount of qualifying hotel expenditure in respect of a building; and
(b) during the whole of a year of income, a taxpayer—
(i) was the owner of the hotel part and dealt with the hotel part in the prescribed manner; or
(ii) was the owner of a part of the hotel part and dealt with that part of the hotel part in the prescribed manner,
the taxpayer is entitled to a deduction, in his assessment in respect of income of that year of income, of an amount equal to—
(c) in a case to which sub-paragraph (i) of paragraph (b) applies—2½%of the amount of qualifying hotel expenditure; and
(d) in a case to which sub-paragraph (ii) of paragraph (b) applies—so much of the amount calculated in accordance with paragraph (c) as the Commissioner determines, having regard to the extent to which the amount of qualifying hotel expenditure is attributable to the part of the hotel part referred to in that sub-paragraph.
“(2) Subject to this section and section 124zd, where—
(a) there is an amount of qualifying hotel expenditure in respect of a building; and
(b) during a part only of a year of income, a taxpayer—
(i) was the owner of the hotel part and dealt with the hotel part in the prescribed manner; or
(ii) was the owner of a part of the hotel part and dealt with that part of the hotel part in the prescribed manner,
the taxpayer is entitled to a deduction, in his assessment in respect of income of that year of income, of an amount equal to—
(c) in a case to which sub-paragraph (i) of paragraph (b) applies—2½% of so much of that amount of qualifying hotel expenditure as bears to that amount the same proportion as the number of whole days in that part of the year of income bears to the number of days in the year of income; and
(d) in a case to which sub-paragraph (ii) of paragraph (b) applies—so much of the amount calculated in accordance with paragraph (c) as the Commissioner determines, having regard to the extent to which the amount of qualifying hotel expenditure is attributable to the part of the hotel part referred to in that sub-paragraph.
“(3) Subject to this section and section 124zd, where—
(a) there is an amount of qualifying apartment expenditure in respect of a building; and
(b) during the whole of a year of income, a taxpayer—
(i) was the owner of the apartment part and dealt with the apartment part in the prescribed manner; or
(ii) was the owner of a part of the apartment part and dealt with that part of the apartment part in the prescribed manner,
the taxpayer is entitled to a deduction, in his assessment in respect of income of that year of income, of an amount equal to—
(c) in a case to which sub-paragraph (i) of paragraph (b) applies—2½% of the amount of qualifying apartment expenditure; and
(d) in a case to which sub-paragraph (ii) of paragraph (b) applies—so much of the amount calculated in accordance with paragraph (c) as the Commissioner determines, having regard to the extent to which the amount of qualifying apartment expenditure is attributable to the part of the apartment part referred to in that sub-paragraph.
“(4) Subject to this section and section 124zd, where—
(a) there is an amount of qualifying apartment expenditure in respect of a building; and
(b) during a part only of a year of income, a taxpayer—
(i) was the owner of the apartment part and dealt with the apartment part in the prescribed manner; or
(ii) was the owner of a part of the apartment part and dealt with that part of the apartment part in the prescribed manner,
the taxpayer is entitled to a deduction, in his assessment in respect of income of that year of income, of an amount equal to—
(c) in a case to which sub-paragraph (i) of paragraph (b) applies—2½% of so much of that amount of qualifying apartment expenditure as bears to that amount the same proportion as the number of whole days in that part of the year of income bears to the number of days in the year of income; and
(d) in a case to which sub-paragraph (ii) of paragraph (b) applies—so much of the amount calculated in accordance with paragraph (c) as the Commissioner determines, having regard to the extent to which the amount of qualifying apartment expenditure is attributable to the part of the apartment part referred to in that sub-paragraph.
“(5) For the purposes of determining the amount of a deduction allowable to a taxpayer under this section in respect of an amount of qualifying hotel expenditure or qualifying apartment expenditure in respect of an eligible building, the taxpayer shall be taken not to have dealt with any part of the hotel part or apartment part, as the case may be, in the prescribed manner at any time after the expiration of the period of 40 years commencing on the day on which the hotel part or apartment part, as the case may be, was first used by any person for any purpose after completion of the relevant construction.
“(6) Where—
(a) apart from this sub-section, a deduction (in this sub-section referred to as the ‘relevant deduction’) would be allowable to a taxpayer in respect of income of a year of income in respect of an amount of qualifying expenditure;
(b) the Commissioner is satisfied that, after 1 May 1980, the taxpayer entered into an agreement, arrangement or understanding with an exempt body under which the taxpayer was to pay an amount, or transfer property, directly or indirectly, to the exempt body, being an amount which, or property the value of which, was to be calculated by reference to the amount of any deduction allowable to the taxpayer under this Division in respect of that qualifying expenditure in relation to that year of income; and
(c) the Commissioner is satisfied that the agreement, arrangement or understanding was entered into for the purpose, or for purposes that included the purpose (not being a merely incidental purpose), of securing that the benefit of any reduction in the liability to tax of the taxpayer that would, but for this sub-section, result from the allowance of the relevant deduction would pass wholly or substantially to the exempt body, whether directly or indirectly,
the relevant deduction shall not be allowed to the taxpayer.
“124zd. (1) Where—
(a) apart from this sub-section, a deduction would be allowable to a taxpayer under section 124zc in respect of an amount of qualifying hotel expenditure in relation to the use of the hotel part or a part (in this sub-section referred to as the ‘relevant part’) of the hotel part during a year of income or a part of a year of income; and
(b) during the whole or a part of the year of income, or of that part of the year of income, as the case may be—
(i) any part of the hotel part or of the relevant part, as the case may be, was not used wholly or principally for the purpose of operating a hotel, motel or guest house; or
(ii) the hotel part or the relevant part, as the case may be, was used by the taxpayer only partly for the purpose of producing assessable income,
the amount of the deduction shall be reduced by such amount as the Commissioner considers fair and reasonable.
“(2) Where, apart from this sub-section, a deduction would be allowable to a taxpayer under section 124zc in respect of an amount of qualifying apartment expenditure in relation to the use of the apartment part or of a part (in this sub-section referred to as the ‘relevant part’) of the apartment part during a year of income or a part of a year of income and—
(a) during the whole or a part of the year of income, or of that part of the year of income, as the case may be, any part of the apartment part or of the relevant part, as the case may be, was not used, or made available for use, wholly for, or in association with, the provision of short-term accommodation for travellers; or
(b) during the whole or a part of the year of income, or of that part of the year of income, as the case may be, the apartment part or the relevant part, as the case may be, was used by the taxpayer only partly for the purpose of producing assessable income,
the amount of the deduction shall be reduced by such amount as the Commissioner considers fair and reasonable.
“(3) For the purposes of sub-section (2), a facility in a building shall be taken to be used, or made available for use, wholly in association with the provision of short-term accommodation for travellers at a particular time only if, at that time, it is used, or made available, for use, wholly or principally in association with the provision of short-term accommodation in eligible apartments, units or flats contained in the building.
“(4) For the purposes of sub-section (3), an apartment, unit or flat contained in an eligible apartment building shall be taken to be an eligible apartment, unit or flat at a particular time if the whole or a part of an amount of qualifying apartment expenditure is attributable to the whole or a part (which whole or part, as the case may be, is in this sub-section referred to as the ‘relevant part’) of the apartment, unit or flat, as the case may be, and—
(a) where the relevant part is the apartment part in relation to that amount of qualifying apartment expenditure—the owner of the apartment part at that time is taken to have dealt with the apartment part in the prescribed manner at that time or would, but for the operation of sub-section (5) of section 124zc, be taken to have dealt with the apartment part in the prescribed manner at that time; and
(b) where the relevant part is a part of the apartment part in relation to that amount of qualifying apartment expenditure—the owner of that part of the apartment part at that time is taken to have dealt with that part of the apartment part in the prescribed manner at that time or would, but for the operation of sub-section (5) of section 124zc, be taken to have dealt with that part of the apartment part in the prescribed manner at that time.
“(5) Where—
(a) by reason of the destruction of an eligible building or a part of an eligible building, a deduction (in this sub-section referred to as the ‘relevant deduction’) is allowable in respect of the whole or a part of the residual capital expenditure in relation to an amount of qualifying hotel expenditure or qualifying apartment expenditure in respect of the eligible building; and
(b) in respect of any part of the period commencing on the day on which the hotel part or apartment part, as the case may be, was first used by any person for any purpose after completion of the relevant construction and ending immediately before the time of destruction—
(i) a deduction has not been allowed and is not allowable under section 124zc to any person in respect of that amount of qualifying hotel expenditure or qualifying apartment expenditure; or
(ii) a deduction that has been allowed or is allowable under section 124zc to any person in respect of that amount of qualifying hotel expenditure or qualifying apartment expenditure has been reduced, or is liable to be reduced, by virtue of the application of sub-section (1) or (2) of this section,
the relevant deduction shall be reduced by such amount as the Commissioner considers fair and reasonable.
“124ze. (1) Subject to this section and section 124zd, where—
(a) there is an amount of qualifying hotel expenditure in respect of a building;
(b) during a year of income, the hotel part is destroyed;
(c) immediately before the destruction, a taxpayer owned the hotel part or a part (in this sub-section referred to as the ‘relevant part’) of the hotel part;
(d) at any time before the destruction, the taxpayer used the hotel part or the relevant part, as the case may be, in the prescribed manner;
(e) if the taxpayer did not use the hotel part or the relevant part, as the case may be, in the prescribed manner immediately before the time of the destruction, no part of the hotel part or of the relevant part, as the case may be, that, at the time (in this paragraph referred to as the ‘relevant time’) when the hotel part or the relevant part, as the case may be, was last used in the prescribed manner, was used for the purpose of operating a hotel, motel or guest house was used by any person for any purpose after the relevant time and before the time of the destruction;
(f) in a case where the taxpayer owned the whole of the hotel part immediately before the time of the destruction, the residual capital expenditure at that time in relation to the amount of qualifying hotel expenditure exceeds the amount (if any) received or receivable by the taxpayer (under a policy of insurance or otherwise) in respect of the destruction of the hotel part; and
(g) in a case where the taxpayer owned a part only of the hotel part immediately before the time of the destruction, so much of the residual capital expenditure at that time in relation to the amount of qualifying hotel expenditure as is attributable to the relevant part exceeds the amount (if any) received or receivable by the taxpayer (under a policy of insurance or otherwise) in respect of the destruction of the relevant part,
the taxpayer is entitled, in his assessment in respect of income of the year of income, to a deduction of an amount equal to-—
(h) in a case to which paragraph (f) applies—the excess referred to in that paragraph; and
(j) in a case to which paragraph (g) applies—the excess referred to in that paragraph.
“(2) Subject to this section and section 124zd, where—
(a) there is an amount of qualifying hotel expenditure in respect of a building;
(b) during a year of income, a part (in this sub-section referred to as the ‘destroyed part’) of the hotel part is destroyed;
(c) immediately before the destruction, a taxpayer owned the destroyed part or a part (in this sub-section referred to as the ‘relevant part’) of the destroyed part;
(d) at any time before the destruction, the taxpayer used the destroyed part or the relevant part, as the case may be, in the prescribed manner;
(e) if the taxpayer did not use the destroyed part or the relevant part, as the case may be, in the prescribed manner immediately before the time of the destruction, no part of the destroyed part or of the relevant part, as the case may be, that, at the time (in this paragraph referred to as the ‘relevant time’) when the destroyed part or the relevant part, as the case may be, was last used in the prescribed manner, was used for the purpose of operating a hotel, motel or guest house was used by any person for any purpose after the relevant time and before the time of the destruction;
(f) in a case where the taxpayer owned the whole of the destroyed part immediately before the time of the destruction, so much of the residual capital expenditure at that time in relation to the amount of qualifying hotel expenditure as is attributable to the destroyed part exceeds the amount (if any) received or receivable by the taxpayer (under a policy of insurance or otherwise) in respect of the destruction of the destroyed part; and
(g) in a case where the taxpayer owned a part only of the destroyed part immediately before the time of the destruction, so much of the residual capital expenditure at that time in relation to the amount of qualifying hotel expenditure as is attributable to the relevant part exceeds the amount (if any) received or receivable by the taxpayer (under a policy of insurance or otherwise) in respect of the destruction of the relevant part,
the taxpayer is entitled, in his assessment in respect of income of the year of income, to a deduction of an amount equal to—
(h) in a case to which paragraph (f) applies—the excess referred to in that paragraph; and
(j) in a case to which paragraph (g) applies—the excess referred to in that paragraph.
“(3) Subject to this section and section 124zd, where—
(a) there is an amount of qualifying apartment expenditure in respect of a building;
(b) during a year of income, the apartment part is destroyed;
(c) immediately before the destruction, a taxpayer owned the apartment part or a part (in this sub-section referred to as the ‘relevant part’) of the apartment part;
(d) at any time before the destruction, the taxpayer used the apartment part or the relevant part, as the case may be, in the prescribed manner;
(e) if the taxpayer did not use the apartment part or the relevant part, as the case may be, in the prescribed manner immediately before the time of the destruction, no part of the apartment part or of the relevant part, as the case may be, that, at the time (in this paragraph referred to as the ‘relevant time’) when the apartment part or the relevant part, as the case may be, was last used in the prescribed manner, was used, or made available for use, for, or in association with, the provision of short-term accommodation for travellers was used by any person for any purpose after the relevant time and before the time of the destruction;
(f) in a case where the taxpayer owned the whole of the apartment part immediately before the time of the destruction, the residual capital expenditure at that time in relation to the amount of qualifying apartment expenditure exceeds the amount (if any) received or receivable by the taxpayer (under a policy of insurance or otherwise) in respect of the destruction of the apartment part; and
(g) in a case where the taxpayer owned a part only of the apartment part immediately before the time of the destruction, so much of the residual capital expenditure at that time in relation to the amount of qualifying apartment expenditure as is attributable to the relevant part exceeds the amount (if any) received or receivable by the taxpayer (under a policy of insurance or otherwise) in respect of the destruction of the relevant part,
the taxpayer is entitled, in his assessment in respect of income of the year of income, to a deduction of an amount equal to—
(h) in a case to which paragraph (f) applies—the excess referred to in that paragraph; and
(j) in a case to which paragraph (g) applies—the excess referred to in that paragraph.
“(4) Subject to this section and section 124zd, where—
(a) there is an amount of qualifying apartment expenditure in respect of a building;
(b) during a year of income, a part (in this sub-section referred to as the ‘destroyed part’) of the apartment part is destroyed;
(c) immediately before the destruction, a taxpayer owned the destroyed part or a part (in this sub-section referred to as the ‘relevant part’) of the destroyed part;
(d) at any time before the destruction, the taxpayer used the destroyed part or the relevant part, as the case may be, in the prescribed manner;
(e) if the taxpayer did not use the destroyed part or the relevant part, as the case may be, in the prescribed manner immediately before the time of the destruction, no part of the destroyed part or of the relevant part, as the case may be, that, at the time (in this paragraph referred to as the ‘relevant time’) when the destroyed part or the relevant part, as the case may be, was last used in the prescribed manner, was used, or made available for use, for, or in association with, the provision of short-term accommodation for travellers was used by any person for any purpose after the relevant time and before the time of the destruction of the destroyed part;
(f) in a case where the taxpayer owned the whole of the destroyed part immediately before the time of the destruction, so much of the residual capital expenditure at that time in relation to the amount of qualifying apartment expenditure as is attributable to the destroyed part exceeds the amount (if any) received or receivable by the taxpayer (under a policy of insurance or otherwise) in respect of the destruction of the destroyed part; and
(g) in a case where the taxpayer owned a part only of the destroyed part immediately before the time of the destruction, so much of the residual capital expenditure at that time in relation to the amount of qualifying apartment expenditure as is attributable to the relevant part exceeds the amount (if any) received or receivable by the taxpayer (under a policy of insurance or otherwise) in respect of the destruction of the relevant part,
the taxpayer is entitled, in his assessment in respect of income of the year of income, to a deduction of an amount equal to—
(h) in a case to which paragraph (f) applies—the excess referred to in that paragraph; and
(j) in a case to which paragraph (g) applies—the excess referred to in that paragraph.
“(5) Where—
(a) a building or a part of a building is destroyed; and
(b) an amount is received or receivable by a person who, immediately before the time of the destruction, owned the whole or a part of the building in respect of the disposal of any property (in this sub-section referred to as the ‘relevant property’) that, immediately before the destruction, formed part of the building or of that part of the building, as the case may be, that was destroyed,
the amount so received or receivable, reduced by any demolition costs incurred in respect of the relevant property, shall be taken to be an amount received or receivable by the person in respect of the destruction of the property of which the relevant property so formed part.
“(6) Where—
(a) an amount is received or receivable by a person under a policy of insurance or otherwise in respect of the destruction of property; and
(b) it is required to be determined for the purposes of this Division how much of the amount received or receivable was received or is receivable in respect of part of the property referred to in paragraph (a),
so much of the amount referred to in paragraph (a) as, in the opinion of the Commissioner, relates to the part of the property referred to in paragraph (b) shall be taken to have been received or to be receivable, as the case may be, by the person in respect of the part of the property referred to in paragraph (b).”.
(a) by omitting from column 3 of the table in sub-section (2) “$500” (wherever occurring) and substituting “$800”;
(b) by omitting from column 3 of the table in sub-section (2) “$226” (wherever occurring) and substituting “$362”;
(c) by omitting from column 3 of the table in sub-section (2) “$170” and substituting “$272”;
(d) by omitting from column 3 of the table in sub-section (2) “$452” and substituting “$722”; and
(e) by omitting from sub-section (4) “$170” and substituting “$272”.
(a) by omitting from sub-section (1) the definition of “relevant amount” and substituting the following definition:
“‘relevant amount’ means any of the following amounts:
(a) an amount of $800, $722, $362 or $272 specified in section 159j;
(b) an amount of $559 specified in section 159k;
(c) an amount of $800 specified in section 159l;”;
(b) by omitting “1977” from the definition of “relevant year of income” in sub-section (1) and substituting “1981”; and
(c) by omitting sub-sections (2), (2a), (2b), (2c) and (2d)and substituting the following sub-sections:
“(2) Where, in relation to a relevant year of income, being a year of income in relation to which the factor ascertained in accordance with sub-section (3) of section 9 of the
Income Tax (Rates )Act 1976 is greater than 1, there is in operation, at a particular time, a provision of an Act declaring that relevant year of income to be a prescribed year of income for the purposes of section 9 of theIncome Tax (Rates )Act 1976, this Act shall be deemed to have effect, in relation to any assessment made at that time in relation to that relevant year of income, as if for each relevant amount there were deemed to be substituted an amount calculated by multiplying—(a) in a case to which paragraph (b) does not apply—the relevant amount; or
(b) if, by virtue of the application of this section, this Act was deemed to have effect in relation to the year of income that last preceded the relevant year of income concerned as if another amount were deemed to be substituted for the relevant amount—the amount that, for the purposes of this Act, was deemed to be substituted for the relevant amount by the application of this section in relation to the year of income that last preceded the relevant year of income concerned,
by the factor ascertained in accordance with sub-section (3) of section 9 of the
Income Tax (Rates )Act 1976 in relation to the relevant year of income concerned or, where a lesser factor is prescribed by regulations made under sub-section (4) of section 9 of that last-mentioned Act in relation to the relevant year of income concerned, by that lesser factor.“(2a) Where—
(a) in relation to a relevant year of income, this Act is not deemed, at a particular time, to have effect in accordance with sub-section (2); and
(b) by virtue of the application of this section, this Act was deemed to have effect in relation to the year of income that last preceded the relevant year of income concerned as if another amount were deemed to be substituted for a relevant amount,
this Act shall be deemed to have effect, in relation to any assessment made at that time in relation to the relevant year of income concerned, as if for that relevant amount there were deemed to be substituted the amount that was, for the purposes of this Act, deemed to be substituted for that relevant amount by the application of this section in relation to the year of income that last preceded the relevant year of income concerned.
“(2b) For the purposes of the application of sub-section (2) or (2a) in relation to a relevant year of income, a reference in that sub-section to the amount that was deemed to be substituted for a relevant amount by the application of this section in relation to the year of income that last preceded the relevant year of income shall, in a case where, in relation to the year of income that last preceded the relevant year of income, an amount was deemed by sub-section (2) to be substituted for that relevant amount and an amount was also deemed by sub-section (2a) to be substituted for that relevant amount, be read as a reference to the amount that was deemed by sub-section (2) to be substituted for that relevant amount.”.
(a) by inserting in sub-section (10) “, 26aab” after “section 23ab”.
(b) by inserting in sub-section (10) “section 53h,” after “section 51ac,”; and
(c) by inserting in sub-section (10) “Subdivision BB of Division 3 of Part III,” after “section 82d,”.
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