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14. Payments received for entering into restrictive agreements are capital.
Dickenson v FCT
15. Compensation for loss of trading stock is considered as income.
CIR v Newcastle Breweries Ltd
16. Sales of knowledge or know-how are income.
Rolls-Royce Ltd v Jeffrey
17. Sale or assignment of income streams should be treated as income, and the lump sum is assesable
under s. 25(1).
Myer Emporium
18. Undissected lump sum, where lump sum amounts comprising both income and capital, but without
dissection into their actual components, should be treated as capital.
Mclaurin v FCT
19. Lottery prize are not income in the Australian jurisdiction.
20. Gambling wins will only constitute deduction and assessable income, if they may be seen as proceeds
of a business.
Trautwein v FCT
21. Receipts form gambling wins are not assessable. (Martin v FCT)
22. No liability to tax arises where a person participates casually in a competition and wins a prize.
However, a professional quiz player regular appearances on quiz programs the prizes may constitute
assessable income.
Case T14
23. Receipts or proceeds form hobbies, as distinguished from business, are deemed not to be assessable
income. Also, expenses and losses from hobbies are not deductibel.
24. Organizations have no identity separate from their members, thus subscriptions and other
contributions form members cannot be treated as income, they are mutual in character.
The Bohemians Club v Acting FCT
25. Income from illegal activities are assessable.
Partridge v Mallandaine
26. Profits arising from ultra vires actions of company directors may be assessable of the company.
England v Webb
2
3. S. 15-2(1): includes the value to the taxpayer of allowances, gratuities, compensations, benefits,
bonuses and premiums provided, directly or indirectly, with respect to employment or services.
4. S. 15-2(2): does not have to be in the form of money.
5. S. 15-2(3)(d): if the allowance etc is ordinary income under s. 6-5, then s. 15-2 will not operate.
6. S. 6-25(2): cannot assess income twice.
7. S. 15-3: payments only made to induce a resumption of work are included in assessable income.
8. S. 15-10: your assessable income includes a bounty or subsidy that is paid a government to assist in the
carrying on of a business, where the amount is not ordinary income assessable under s. 6-5.
9. S. 15-15: profits arising form the carrying on or carrying out of a profit-making undertaking or plan is
included in assessable income, except where the profit is ordinary income assessable under s. 6-5.
10. Due to capital gain, s. 15-15 often not apply, there just in case.
11. Ordinary meaning of Royalties:
McCauley v FCT
12. S. 15-20: your assessable income includes an amount that you received as or by way of royalty within
the ordinary meaning of royalty and is not ordinary income under s. 6-5(1).
13. S. 15-30: any amount you received by way of insurance or indemnity for the loss of an amount is
included in assessable income, and the amount received is not ordinary income assessable under s.
6-5.
14. S. 15-35: If a taxpayer overpays their tax, interest paid on that tax by the ATO is assessable.
15. S. 15-70: reimbursement for car expenses on a cents per kilometer basis will be assessable.
This is different from a car allowance which is ordinary income under s. 6-5(1).
Here, the employee is given extra money from employer to pay for car expenses.
5
16. S. 83-10: unused annual leave paid out as a lump sum on termination of employment is assessable.
17. S. 83-70: long service leave paid out is assessable.
18. S. 23L(1): income derived via a fringe benefit is not assessable as ordinary income.
19. S. 23L(2): non-cash business benefits within the meaning of s. 21A that are valued at less than $300 is
exempt.
Source of income
21. Payment for services - generally where the work was performed, but in Mitchum v FCT where the
place of signing a contract for services was decisive.
8
22. Dividends - the source is the same as the source of the companys profits.
Nathan and Esquire Norminees
23. Interest - generally where the agreement to pay the interest is made.
Studebaker v C of T
24. Royalties - the source is usually where the persons with the know-how or who supply the services
reside.
FCT v United Aircraft Corporation
25. Business or trading income - the place where the agreements are made and the transactions entered
into.
Tariff Reinsurances v DCT
10
11
11. Timing of event A1: CGT event A1 occurs when you enter the contract for disposal, or;
If there is no contract, when the change of ownership occurs.
S. 104-5, S. 104-10(3) & S. 109-5(2)
12. Capital proceeds s. 116-20(1): the money received or receivable, and the market value you have
received or entitled to receive.
13. Cost base s. 110-25: a. The amount paid (s. 110-25(2))
b. Incidental cost of disposal (s. 110-25(3))
c. Capital expenditure to upgrade the asset that relates to installing or moving
asset (s. 110-25(5))
14. Incidental cost: a. Cost of surveyor, value, broker (s. 110-35(2))
b. Cost of transfer (s. 110-35(3))
c. Stamp duty or similar duty (s. 110-35(4))
d. Cost of advertising for selling and buying (s. 110-35(5))
e. Cost of obtaining a valuation (s. 110- 35(6))
f. Search fees (s. 110-35(7))
15. Indexation cost base (s. 960-275(2)) = Index number at quarter ending 30 Sept 1999 (always 68.7)
Index number at quarter of purchase (check index table)
Table of index numbers: Taxation Law, p. 327
16. Discounting: a. Available only to individuals, trusts and superannuation funds. Not available to
companies (s. 115-10
b. Available for assets purchased after 21/9/1999 and held for more than 12 months (s.
115-15, s. 115-25)
c. The net capital gain is reduced by 50% for individuals and trusts (s. 115-100(a))
Summary
17. If disposed of asset on or before 21/9/99:
A. Held asset > 12 months: indexation s. 114-1 & s. 114-10(1)
B. Held asset 12 months: indexation not available s. 114-10(1)
C. Discounting not exist before 21/9/99
12
18. If disposed of asset after 21/9/99 and asset was acquired on or before 21/9/99:
A. Held asset < 12 months: no indexation s. 114-10(1), no discounting s. 115-25(1)
B. Held asset 12 months: can choose indexation s. S.114-1 & s. 114-10(1), or discounting
s. 115-15 & s. 115-25(1)
C. Company cannot discount at all (s.115-10)
19. If asset was disposed of and acquired after 21/9/99:
A. Held asset >12 months: discount available s. 115-15 & s. 115-25(1)
B. Held asset 12 months: no discount s. 115-25(1)
C. Indexation not available at all s. 114-1
D. Company cannot discount at all (s.115-10)
20. Often discounting will be better, but not when there are large carry forward losses, and company can
only index (if available)
21. Steps in calculation: a. CGT asset? S. 108-5, disposal of asset event A1
b. Exemptions?
c. Type of CGT asset?
d. If you have a gain, consider the concessions: Indexation s. 114-1 & s. 114-10
Discounting s. 115-5,-10,-15,-20
c. Calculate the gain/loss
14
15
16
gaining or producing assessable income, the loss will be deductible unless it is of a capital nature.
()
Placer Pacific v FCT
Judicial Test
14. Incidental and relevant test: The occasion of the loss or outgoing should be found in whatever is
productive of the assessable income or, if none be produced, would be expected to produce
assessable income.
( Charles Moore
Ronpibon Tin
15. Essential character test: two taxpayers claims for travel costs from home to work were denied.
( derive income derive income,)
Lunney v FCT
16. S. 25-100: to allow a deduction to an individual taxpayer from the 2001-2002 year for direct travel
between two places of work.
17. S. 25-100(3): a deduction is not allowed under this section if one of the work places is also the
taxpayers residence.
Apportionment
18. Apportionment allows a deduction for the expenditure that is not private or capital or not used to
produce exempt income.
19. Legal rights test (traditional): if the legal right acquired from the loss or outgoing was not related to
a deductible purpose, the loss or outgoing attributable to that right
would not deductible. (old approach, not use now)
( trading stock )
Cecil Bros v FCT
20. Identifiable purpose test (current): concern with the taxpayers purpose in deciding whether an
outgoing was deductible.
( 12.5% 13.5% mainly private,
1%
Ure v FCT
19
21. Where you have at least one purpose that satisfies a positive limb, and at least one purpose that
satisfies a negative limb, then apportionment is required.
22. Cash base and accruals base are only relevant for income. Expenses are deductible when incurred for
all taxpayers.
23. Expenditure on the business entity, structure, or organization is capital, eg expenditure on factory.
Sun Newspapers
24. Expenditure on the process by which an organization earns income is deductible, eg expenditure on
maintaining the factory is deductible.
Sun Newspapers
25. Expenditure to protect tangible assets is more likely to be capital.
26. Expenditure to protect intangibles is more likely to be revenue.
27. Private or domestic () expenditure wont satisfy the positive limbs anyway.
FCT v Hatchett
28. Child-minding expenses are not deductible, even if need to expend to earn income.
Lodge v FCT
29. Travel between home and work, even though you need to travel to work to earn money.
Lunney v FCT
30. Amounts set aside as provisions at the end of the year to provide for liabilities which are expected to
be incurred in the future are not deductible.
James Food
31. Advance payments for services will generally be deductible, if the taxpayer becomes contractually
committed to pay amount due and therefore incurs the liability.
FCT v Raymor
20
FCT v Highfield
4. Formula: Upper limit of the = Net amount of expenses - $250
total s. 8-1 deduction of self-education
5. S. 82A(2): necessarily incurred by the taxpayer for or in connection with a prescribed course (not
necessary to be formal course) of education.
6. Net amount of expense of self-education = reduce the expense by educational assistance payment
Tax-Related Expenses
7. S. 25-5(1): expenditure incurred in managing the taxpayers tax affairs, or in paying a general interest
charge imposed under Taxation Act, is deductible.
Repairs
8. S. 25-10(1): can deduct expenditure incurred for repairs to part or a depreciating asset held solely for
the purpose of producing assessable income.
9. S.25-10: if held partly for producing assessable income, you can deduct expenditure as is reasonable.
10. S. 25-10(3): cannot deduct the expenditure if its capital.
11. Significantly improving the items function is not a repair.
FCT v Western Suburbs Cinemas
12. Pre-emptive repairs are deductible ().
13. Altering an item that is functioning efficiently is not a repair.
( repair)
Case J47 & Case G29
14. Initial repairs: repairs made to restore a newly acquired (recently) item to functional condition or
suitable working order are not deductible.
Law Shipping
Entertainment
15. S. 32-5: entertainment is generally not deductible.
16. Definition of entertainment in s. 32-10(1): food, drink recreation or accommodation or travel to do
with food, drink, or recreation.
Payments to related parties
17. S. 26-35(1): can only deduct amounts paid to related parties that the Commissioner considers
reasonable.
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18. Applies where the taxpayer attempting to claim the deduction is an individual or partnership.
Superannuation
19. S. 290-150(1): a taxpayer can get deduction for superannuation paid to a superannuation fund for
their own super they pay. (for self)
20. S. 290-150(3): the deduction is claimed in the year you make the contribution.
21. S. 290-60(1): deduction allowed for taxpayers for superannuation contributions made on behalf of
their employees to superannuation funds. (for employer)
Borrowing expense
22. S. 25-25(1): deduction allowed for expenses incurred in borrowing money for the purpose of
producing assessable income.
23. This does not refer to interest on the loan, but loan application fees, legal expenses, stamp duty on the
loan, valuation fees, brokers commission.
24. S. 25-25(6): if the borrowing expenses do not exceed $100, they are deductible in full in the year
incurred.
25. S. 25-25(5): if more than $100, then the expenses are amortised over the period of the loan.
* the period from when the money was borrowed until it was repaid
* 5 years (1826 days) from when the funds were borrowed
Others
26. S. 25-20: allows a deduction for expenditure incurred in preparing, registering a lease, or for the
assignment or surrender of a lease of property, that is to be, or has been, held by the
taxpayer solely for the purpose of producing assessable income.
()
27. S. 25-30: allows a deduction for the expense of discharging a mortgage given by the taxpayer to the
extent to which the money borrowed or property purchased was used for producing
assessable income.
()
28. S. 25-35: you can deduct a bad debt if it was included in assessable income in any year or lent in
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the course of a money lending business; the debt is bad; the debt is written off in the
income year the deduction is claimed.
()
29. S. 25-45: a loss of money included by a taxpayer through theft and the like is deductible where the
perpetrator was a person employed by the taxpayer, and the money is included in the
taxpayers assessable income.
(
30. S. 25-50: allows a deduction for the employment by a taxpayer of a pension, gratuity or retirement
allowance to an employee or former employee of a business carried on by the taxpayer.
(
31. S. 25-55(1): allows a deduction for payment for membership of a trade, business or professional
association, subject to a $42 limit for each association as laid down in s. 25-55(2).
($42 )
32. S. 25-75: allows an entity to deduct annually assessed rates and land tax imposed on its premises
where it uses those premises to produce mutual receipts and assessable income.
()
33. S. 26-5: denies a deduction under s. 8-1 for any penalty imposed by law or fine imposed by court.
()
34. S. 26-10: prevents a deduction under s. 8-1 for amounts simply accrued in leave provisions.
35. S. 26-26: dividend paid by a company are not deductible by the company.
()
36. S. 26-40: expenditure incurred by a taxpayer in maintaining a spouse who is living with the taxpayer
or child under 16 years old is not deductible.
()
37. S. 26-45: (recreational club expense)
38. S. 26-50: (leisure facilities)
39. S. 26-53: denies a deduction for a bribe () to a public official.
40. S. 26-54: denies a deduction for a loss or outgoing incurred in relation to the commission of an
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indictable offence.
()
41. Tax loss is that amount by which total deductions exceed assessable income and net exempt income.
26
held .
6. S. 40-95 says that a taxpayer can choose an effective life in accordance with s. 40-105 or use a
Commissioners estimate in accordance with s. 40-100.
7. S. 40-95(3): make the choice at start time where the asset is first used or installed ready for use.
8. Diminishing value: s. 40-70(1) or s. 40-72(1)
Base Value Days Held (s.40-70(1)) 150% (cite s. 40-70(1)) or 200% (cite s.40-72(1))
365 Effective Life (cite s.40-95, s. 40-100, s. 40-105)
-Base value s. 40-70(1) = cost at start time or opening adjustable value plus second element costs.
-Second element cost = costs in bringing the asset to its present condition and location and costs
attributable to a balancing adjustment (eg cost of delivery, installation)
-If start time is after 9 May 2006, use 200% (s. 40-72(1))
9. Prime cost: s. 40-75(1)
Assets Cost Days Held (s.40-70(1)) 100%
(s. 40-180) 365 Effective Life
10. Sale of depreciating asset:
a. if termination value exceeds adjustable value, there is an assessable gain s. 40-285(1).
b. If adjustable value exceeds termination value, there is a deductible loss s. 40-285(2).
11. Termination value: generally be the amount received for the asset on disposal (s. 40-300(1)) or taken
to have received (s. 40-305(1)).
12. Adjustable value: cost less the total decline in value (depreciation) up to the date of sale (s.
40-85(1)).
13. S. 40-25(2): if there has been some private use of the asset, then the deduction for decline in value is
reduced by the percentage of private use
14. The balancing adjustment is also reduced and is calculated in accordance with s. 40-290(2).
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4. If the taxpayers operations the same as the those who operate a business in the same industry, then
that is an indicator that the taxpayer is conducting a business.
IR Commrs V Livingston
5. Hobby usually do for fun, not for profit, and no one would pay others to do your hobby for you, thus
hobby is not a business.
6. A business can be conduct in a small way.
Thomas v FCT
7. Athletic talents for profit should be treated carrying on a business of being a professional athlete and
all receipts should be assessable.
()
FCT v Stone
8. Gambling has profit motive, but it is not a business.
Brajkovich v FCT
9. Moneylenders dont always have to lend money to the public at large, but it is a business.
FCT v Bivonia
10. Illegality is irrelevant (FCT v La Rosa);
Having a regular job or other business is irrelevant (FCT v Stone)
Being forced into operation is irrelevant (Tweddle)
11. A taxpayer is not carrying on a business while experimenting in order to choose between alternative
possible products.
Case D69
12. Inactive does not necessary mean that the business has ceased.
Avondale Motors
13. S. 90: calculate net income or loss of a partnership as if it were a resident taxpayer.
14. S. 92: the net income or loss is distributed to partners who pay tax on that distribution.
15. Partnership: carrying on a business in common with a view to profit.
16. Advantages of partnership: A. No need to publish audited financial accounts
B. Not a separate legal entity (make it simple and easy to reduce cost)
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Topic 14 Partnerships
1. S. 90: calculate net income/loss of a partnership as if it were a resident taxpayer.
2. S. 92: the net income/loss is distributed to partners who pay tax on that distribution.
3. S. 90: a. Net income = Assessable income of partnership - allowable deductions
b. Net loss = Allowable deductions - assessable income (with some modifications)
4. Modifications: a. Cannot deduct superannuation contributions for partner s. 90.
Instead individual partner get deduction under s. 290-150.
b. Cannot deduct losses from prior years under s. 92(2).
These losses are distribute to the individual partners.
c. Partnerships cannot make capital gains for tax.
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11. Partners can be owed money from the partnership in two ways:
A. Distribution of profits has not been paid
B. The partner has lent the partnership money (partners cannot loan themselves money)
12. Interest paid on a partners loan can be deducted in certain circumstances.
Leonard v FCT
13. The interest is deductible if it satisfies both step 1 and step 2:
Step 1: a. If the interest is paid on capital account, then the interest is an allocation of profit
( unpaid distribution )
b. If the partner has lent money under a loan agreement, the interest payment is an expense
32
()
if not under an agreement, cannot deduct
if under an agreement, go step 2
Step 2: a. If the partner lent the money under a loan agreement then determine if the interest expense
satisfied either of the two positive limbs of s. 8-1.
b. Interest is never capital, the main issue is whether the loan was used for private purpose or
used to derive exempt income or was used for taxable purpose.
*taxable purpose = derive assessable income
14. Leonard v FCT - interest can be deductible if two criteria are met:
A. If partner loaned as a lender - this has been met due to the commercial interest rate
charged
B. If the loan was used for a taxable purpose - this has occurred since the loan was
used to build the business
Thus interest is deductible under s. 8-1(1)(b)
15. S. 6-5(1): interest will be assessable to the partner as income from property.
16. S. 106-5(1): individual partners must account for the CGT as they have an undivided fractional
interest in the partnership assets.
17. S. 106-5(2): each partner has their own cost base for the asset. (50% vs 50%)
18. S. 108-5(2)(c): an interest in an asset of a partnership is a CGT asset.
34
()
C. What section of the Act is the income taxed under?
()
D. Who pays the tax and at what rate?
()
4. If there is a beneficiary who is presently entitled to some income then we need to know:
A. Is the beneficiary under a legal disability?
()
B. Is the beneficiary a resident or a non-resident?
()
C. Has the beneficiary derived any other income outside of the trust?
()
Approach to Trust
5. Approach: A. Work out the net income of the trust under s. 95(1) - assessing section.
B. Determine who is presently entitled to s. 95(1).
is the beneficiary under a legal disability?
resident or non-resident?
has derived any other income outside of the trust?
C. Work out who pays the tax, under what section, and at what tax rate.
D. Beneficiaries can derive other income. What section and what rate will tax that?
* vested interest:
8. Taylor v FCT: beneficiaries under a legal disability (under 18, in gaol , bankrupt, insane )
may be presently entitled to trust income, but they just couldnt demand payment.
()
() When? (depends on the type of trust)
9. Deceased estates: no-one is presently entitled until: () Whiting v FCT
A. Administration of the deceased estate has finished
B. Debts have been provided for and a residue has been determined
10. Fixed trust: deceased estates/ inter vivos (fixed %) ()
A. Beneficiaries of fixed trusts become presently entitled in a manner described by the
trust instrument.
B. This is usually expressed in the form of fixed percentage to specific individuals.
(trusts )
11. Discretionary trust: deceased estates/ inter vivos ()
A. trustee exercises discretion ()in favor of that beneficiary - s. 101
B. Must be an effective exercise of the trustees discretion on or before 30 June
C. Discretion exercised by the trustees coming together for a meeting and signing a
resolution concerning the distribution.
(resolution is a kind of document which determines who get what of the trust income)
( 30 June )
() Accumulation
12. Taylor v FCT: some trusts accumulate the beneficiarys entitlement until the beneficiary reaches a
certain age, usually relevant for beneficiaries under legal disability.
()
13. If the beneficiary die before reaching 18, beneficiary get the decision to decide who get the money.
Step 3 Who is taxed, under what section, and at what rate?
() No-one is presently entitlement
14. If no-one is presently entitled, then the trustee will be taxed. The tax rate and what section that
applies is determined by the type of trust.
37
38
25. S. 101A now brings these fees into the s. 95(1) income of a deceased estate and deems it to be
income to which no beneficiary is presently entitled.
26. Where accumulation is not held in trust by the beneficiarys personal representatives, if the
beneficiary dies before the relevant age.
( presently entitled presently entitled,
)
5th situation: s. 102 ()
27. Revocable trusts:
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A. Where the creator of the trust has the power to revoke or alter the trust so as to acquire a
beneficial interest in the trust property (s. 102(1)(a))
B. Where a person creates a trust for the benefit of their children and income is distributed
to one or more of them when they are under 18 years old (s. 102(1)(b))
28. The trustee will be liable to pay the tax assessed under s. 102(2).
()
29. To avoid this section, it is best to ensure that the creator of the trust is not a parent of potential infant
beneficiary.
()
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4. S. 102AC(1): a prescribed person is a person who is under 18 on the last day of the income year, and
who is not an excepted person in relation to that year.
5. S. 102AC(2): an excepted person is a minor engaged in a full-time occupation on the last day of the
year of income s. 102AC(2)(a),
a miner in receipt of various allowance or pensions
s. 102AC(2)(b).
()
6. If the minor is not an excepted person, the income derived by the minor will be caught by Div 6AA, if
the income is eligible assessable income.
7. S. 102AD: Eligible taxable income = eligible assessable income - related allowable deductions
(Div 6AA rates apply to this type of income)
8. Eligible assessable income is assessable income that not excepted assessable income s. 102AE(1)
nor excepted trust income s. 102AG(1)
( employment payment deceased estate income )
9. Excepted assessable income under s. 102AE(2)
A. Employment or business income s.102AE(2)(a)
B. Employment income is defined in s. 102AF(1)(b) as payment for services rendered or to
be rendered.
10. Excepted trust income under s. 102AG(2): income from a deceased estate s. 102AG(2)(a)(i).
(taxed at resident or non-resident individual rates)
11. The distribution from the inter vivos discretionary trust is not excepted trust income under
s. 102AG(2), and Div 6AA will apply per s. 102AG(1).
Basic Approach
11. Start by all under 18 and all income they derived within Div 6AA, then exclude either:
A. Excepted persons all income
B. Either excepted trust income or excepted assessable income
Step 1
12. Is the minor an excepted person per s. 102AC(2)?
A. If yes, Div 6AA does not apply, and all their income is taxed resident or non-resident
individual rates
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B. If no, then the minor is a prescribed person per s. 102AC(1), and go step 2.
Step 2
13. If a trust distribution is received, is the distribution excepted trust income per s. 102AG(2)?
(Example of excepted trust income is income from a deceased estate)
A. If yes, Div 6AA does not apply to that trust distribution under s. 102AG(2), and
ordinary individual rates will apply instead (resident or non-resident)
B. If no, Div 6AA does apply to that income since per s. 102AG(1), and go to step 3 for
non trust income.
Step 3
14. Is the income excepted assessable income as per s. 102AE(2)?
(consider each type of receipt separately, eg. wages, interest, etc.)
A. If yes, the Div 6AA does not apply to that income, and ordinary individual rates will apply
(resident or non-resident).
B. If no, then the income is eligible assessable income per s. 102AE(1) and Div 6AA rates will
apply.
5. Subdivision 165-A: a company cannot deduct a tax loss unless under s. 165-10, unless it satisfies
either: a. Continuity of ownership test (COOT) in s. 165-12
b. The same business test (TSBT) in s. 165-13
6. Tax loss is that amount by which total deductions exceed assessable income and net exempt income.
Basic Approach
(the company only need to satisfy one test)
7. First apply COOT for each loss (always first)
If the test is failed for any losses
Apply TSBT for those losses
If TSBT is failed (if TSBT passed, all the losses can be deducted)
Those losses cannot be deducted
Continuity of Ownership Test (COOT) s. 165-12
8. Under s. 165-12, the company must maintain continuity of persons holding more than 50% of:
A. Voting power s. 165-12(2)
B. Rights to dividends s. 165-12(3)
C. Rights to capital distributions s. 165-12(4)
(at all times during the ownership test period)
9. COOT is only concerned with whether there has been a change of ownership greater than 50% in the
ownership test period for that loss.
10. Key point: when the change of ownership occurred?
those loss.
15. Satisfied if throughout TSBT period, the company carries on the same business as it carried on
immediately before the test time. S. 165-210(1)
16. Test period is the income year.
17. Test time is the time immediately before the change in ownership that led to the failure of COOT.
18. Avondale Motors the meaning of same business was interpreted:
A. Identical business activity must be carried on, rather than merely the same kind of business.
B. Size of business is irrelevant.
(distributing + installing does not equal manufacturing, selling and installing; retailing does
not equal manufacturing)
45
3. Example:
4. S. 203-45: for private companies, the franking period is the income year.
5. S. 203-40: for public companies, the income year is divided into two 6 month franking period.
6. S. 203-50: penalties exist for franking either more or less than the benchmark percentage.
7. S. 203-50(1)(a): if the franking percentage exceeds the benchmark, over franking tax is imposed.
8. Penalties:
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9. Example:
10. A resident shareholder receiving a dividend must gross-up the dividend by the amount of the
imputation credit (s. 207-20(1)) and receive a rebate equivalent to this imputation credit (s.
207-20(2)).
11. Example:
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