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INCOME TAX ASSESSMENT ACT 1936

PART IVA - SCHEMES TO REDUCE INCOME TAX    View history reference

SECTION 177C  TAX BENEFITS  

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177C(1)  

Subject to this section, a reference in this Part to the obtaining by a taxpayer of a tax benefit in connection with a scheme shall be read as a reference to:


(a) an amount not being included in the assessable income of the taxpayer of a year of income where that amount would have been included, or might reasonably be expected to have been included, in the assessable income of the taxpayer of that year of income if the scheme had not been entered into or carried out; or


(b) a deduction being allowable to the taxpayer in relation to a year of income where the whole or a part of that deduction would not have been allowable, or might reasonably be expected not to have been allowable, to the taxpayer in relation to that year of income if the scheme had not been entered into or carried out; or
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(ba) a capital loss being incurred by the taxpayer during a year of income where the whole or a part of that capital loss would not have been, or might reasonably be expected not to have been, incurred by the taxpayer during the year of income if the scheme had not been entered into or carried out; or
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(baa) (Repealed by No 96 of 2014)
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(bb) a foreign income tax offset being allowable to the taxpayer where the whole or a part of that foreign income tax offset would not have been allowable, or might reasonably be expected not to have been allowable, to the taxpayer if the scheme had not been entered into or carried out; or
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(bbaa) an innovation tax offset being allowable to the taxpayer where the whole or a part of that innovation tax offset would not have been allowable, or might reasonably be expected not to have been allowable, to the taxpayer if the scheme had not been entered into or carried out; or
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(bba) an exploration credit being issued to the taxpayer where the whole or a part of that exploration credit would not have been issued, or might reasonably be expected not to have been issued, to the taxpayer if the scheme had not been entered into or carried out; or
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(bc) the taxpayer not being liable to pay withholding tax on an amount where the taxpayer either would have, or might reasonably be expected to have, been liable to pay withholding tax on the amount if the scheme had not been entered into or carried out;
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and, for the purposes of this Part, the amount of the tax benefit shall be taken to be:


(c) in a case to which paragraph (a) applies - the amount referred to in that paragraph; and


(d) in a case to which paragraph (b) applies - the amount of the whole of the deduction or of the part of the deduction, as the case may be, referred to in that paragraph; and
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(e) in a case to which paragraph (ba) applies - the amount of the whole of the capital loss or of the part of the capital loss, as the case may be, referred to in that paragraph; and
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(ea) (Repealed by No 96 of 2014)
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(f) in a case where paragraph (bb) applies - the amount of the whole of the foreign income tax offset or of the part of the foreign income tax offset, as the case may be, referred to in that paragraph; and
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(faa) in a case where paragraph (bbaa) applies - the amount of the whole of the innovation tax offset or of the part of the innovation tax offset, as the case may be, referred to in that paragraph; and
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(fa) in a case where paragraph (bba) applies - the amount of the whole of the exploration credit or of the part of the exploration credit, as the case may be, referred to in that paragraph; and
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(g) in a case to which paragraph (bc) applies - the amount referred to in that paragraph.
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[CCH Note: S 177C(1) will be amended by No 21 of 2015, s 3 and Sch 6 item 39, by repealing para (bba) and (fa), effective 1 July 2020. For savings provisions, see note under s 177C(3).]

177C(2)  

A reference in this Part to the obtaining by a taxpayer of a tax benefit in connection with a scheme shall be read as not including a reference to:


(a) the assessable income of the taxpayer of a year of income not including an amount that would have been included, or might reasonably be expected to have been included, in the assessable income of the taxpayer of that year of income if the scheme had not been entered into or carried out where:

(i) the non-inclusion of the amount in the assessable income of the taxpayer is attributable to the making of an agreement, choice, declaration, election or selection, the giving of a notice or the exercise of an option (expressly provided for by this Act or the Income Tax Assessment Act 1997) by any person, except one under Subdivision 126-B, 170-B or 960-D of the Income Tax Assessment Act 1997; and

(ii) the scheme was not entered into or carried out by any person for the purpose of creating any circumstance or state of affairs the existence of which is necessary to enable the declaration, agreement, election, selection, choice, notice or option to be made, given or exercised, as the case may be; or
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(b) a deduction being allowable to the taxpayer in relation to a year of income the whole or a part of which would not have been, or might reasonably be expected not to have been, allowable to the taxpayer in relation to that year of income if the scheme had not been entered into or carried out where:

(i) the allowance of the deduction to the taxpayer is attributable to the making of a declaration, agreement, election, selection or choice, the giving of a notice or the exercise of an option by any person, being a declaration, agreement, election, selection, choice, notice or option expressly provided for by this Act or the Income Tax Assessment Act 1997, except one under Subdivision 960-D of the Income Tax Assessment Act 1997; and

(ii) the scheme was not entered into or carried out by any person for the purpose of creating any circumstance or state of affairs the existence of which is necessary to enable the declaration, agreement, election, selection, choice, notice or option to be made, given or exercised, as the case may be; or
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(c) a capital loss being incurred by the taxpayer during a year of income the whole or part of which would not have been, or might reasonably be expected not to have been, incurred by the taxpayer during the year of income if the scheme had not been entered into or carried out where:

(i) the incurring of the capital loss by the taxpayer is attributable to the making of a declaration, agreement, choice, election or selection, the giving of a notice or the exercise of an option (expressly provided for by this Act or the Income Tax Assessment Act 1997) by any person, except one under Subdivision 126-B, 170-B or 960-D of the Income Tax Assessment Act 1997; and

(ii) the scheme was not entered into or carried out by any person for the purpose of creating any circumstance or state of affairs the existence of which is necessary to enable the declaration, agreement, election, selection, notice or option to be made, given or exercised, as the case may be; or
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(ca) (Repealed by No 96 of 2014)
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(d) a foreign income tax offset being allowable to the taxpayer the whole or a part of which would not have been, or might reasonably be expected not to have been, allowable to the taxpayer if the scheme had not been entered into or carried out, where:

(i) the allowance of the foreign income tax offset to the taxpayer is attributable to the making of a declaration, agreement, election, selection or choice, the giving of a notice or the exercise of an option by any person, being a declaration, agreement, election, selection, choice, notice or option expressly provided for by this Act; and

(ii) the scheme was not entered into or carried out by any person for the purpose of creating any circumstance or state of affairs the existence of which is necessary to enable the declaration, agreement, election, selection, choice, notice or option to be made, given or exercised, as the case may be; or
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(e) an innovation tax offset being allowable to the taxpayer the whole or a part of which would not have been, or might reasonably be expected not to have been, allowable to the taxpayer if the scheme had not been entered into or carried out, where:

(i) the allowance of the innovation tax offset to the taxpayer is attributable to the making of a declaration, agreement, election, selection or choice, the giving of a notice or the exercise of an option by any person, being a declaration, agreement, election, selection, choice, notice or option expressly provided for by this Act; and

(ii) the scheme was not entered into or carried out by any person for the purpose of creating any circumstance or state of affairs the existence of which is necessary to enable the declaration, agreement, election, selection, choice, notice or option to be made, given or exercised, as the case may be.
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[CCH Note: Sch 2 item 405 of the Tax Law Improvement Act (No 1) 1998, effective 22 June 1998, attempted to substitute the following para 177C(2)(c)(i):


(i) the incurring of the capital loss by the taxpayer is attributable to the making of an agreement, choice, declaration, election or selection, the giving of a notice or the exercise of an option (expressly provided for by this Act or the Income Tax Assessment Act 1997) by any person, except one under Subdivision 126-B or 170-B of the Income Tax Assessment Act 1997

As well, Sch 2 item 406 of the Tax Law Improvement Act (No 1) 1998, effective 22 June 1998, attempted to insert "agreement, choice" before "declaration" in subpara 177C(2)(c)(ii).

However, 177C(2)(c) was not inserted until 9 April 1999 (by No 16 of 1999), and the attempted amendments made by Sch 2 items 405 and 406 (of the Tax Law Improvement Act (No 1) 1998) were not made. It is possible that a future technical amendment may change this position.]

177C(2A)  

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A reference in this Part to the obtaining by a taxpayer of a tax benefit in connection with a scheme is to be read as not including a reference to:


(a) the assessable income of the taxpayer of a year of income not including an amount that would have been included, or might reasonably be expected to have been included, in the assessable income of the taxpayer of that year of income if the scheme had not been entered into or carried out where:

(i) the non-inclusion of the amount in the assessable income of the taxpayer is attributable to the making of a choice under Subdivision 126-B of the Income Tax Assessment Act 1997 or an agreement under Subdivision 170-B of that Act; and

(ii) the scheme consisted solely of the making of the agreement or election; or
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(b) a capital loss being incurred by the taxpayer during a year of income the whole or part of which would not have been, or might reasonably be expected not to have been, incurred by the taxpayer during the year of income if the scheme had not been entered into or carried out where:

(i) the incurring of the capital loss by the taxpayer is attributable to the making of a choice under Subdivision 126-B of the Income Tax Assessment Act 1997 or an agreement under Subdivision 170-B of that Act; and

(ii) the scheme consisted solely of the making of the agreement or election; or
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(c) an exploration credit being issued to the taxpayer the whole or a part of which would not have been, or might reasonably be expected not to have been, issued to the taxpayer if the scheme had not been entered into or carried out, where:

(i) the issuing of the exploration credit to the taxpayer is attributable to the making of a choice under Division 418 of the Income Tax Assessment Act 1997; and

(ii) the scheme consisted solely of the making of the choice.
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[CCH Note: Sch 2 items 407 and 408 of the Tax Law Improvement Act (No 1) 1998, effective 22 June 1998, provide for amendment to subsection 177C(2A), by substituting "a choice under Subdivision 126-B of the Income Tax Assessment Act 1997 or an agreement under Subdivision 170-B of that Act" for "an agreement under section 160ZP or an election under section 160ZZO" in subpara 177C(2A)(a)(i) and (b)(i). Subsection 177C(2A) was not inserted until 9 April 1999 (by No 16 of 1999), and so the amendments provided for by items 407 and 408 were not made.]

[CCH Note: S 177C(2A) will be amended by No 21 of 2015, s 3 and Sch 6 items 40 and 41, by substituting "election." for "election; or" in para (b)(ii) and repealing para (c), effective 1 July 2020. For savings provisions, see note under s 177C(3).]

177C(3)  

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For the purposes of subparagraph (2)(a)(i), (b)(i), (c)(i), (d)(i) or (e)(i) or (2A)(a)(i), (b)(i) or (c)(i):


(a) the non-inclusion of an amount in the assessable income of a taxpayer; or


(b) the allowance of a deduction to a taxpayer; or


(c) the incurring of a capital loss by a taxpayer; or
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(ca) the allowance of a foreign income tax offset to a taxpayer; or
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(caa) the allowance of an innovation tax offset to a taxpayer; or
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(cb) the issuing of an exploration credit to a taxpayer;
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is taken to be attributable to the making of a declaration, election, agreement or selection, the giving of a notice or the exercise of an option where, if the declaration, election, agreement, selection, notice or option had not been made, given or exercised, as the case may be:


(d) the amount would have been included in that assessable income; or


(e) the deduction would not have been allowable; or


(f) the capital loss would not have been incurred; or


(fa) (Repealed by No 96 of 2014)
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(g) the foreign income tax offset would not have been allowable; or
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(ga) the innovation tax offset would not have been allowable; or
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(h) the exploration credit would not have been issued.
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[CCH Note: S 177C(3) will be amended by No 21 of 2015, s 3 and Sch 6 items 42-46, by substituting "or (b)(i)" for ", (b)(i) or (c)(i)", by omitting "or" from para (ca), repealing para (cb), substituting "allowable." for "allowable; or" in para (g) and repealing para (h), effective 1 July 2020. No 21 of 2015, s 3 and Sch 6 items 74-79, contain the following savings provisions:

Division 2 - Savings provisions relating to repeal of Division 418

74 Object  
74 The object of this Division is to ensure that, despite the repeals and amendments made by Part 3 of this Schedule, the full legal and administrative consequences of:


(a) any act done or omitted to be done; or


(b) any state of affairs existing; or


(c) any period ending;

before such a repeal or amendment commences, can continue to arise and be carried out, directly or indirectly through an indefinite number of steps, even if some or all of those steps are taken after the repeal or amendment commences.

75 Making and amending assessments, and doing other things, in relation to past matters  
75 Even though an Act is amended by Part 3 of this Schedule, the amendment is disregarded for the purpose of doing any of the following under any Act or legislative instrument:


(a) making or amending an assessment (including under a provision that is itself repealed or amended);


(b) exercising any right or power, performing any obligation or duty or doing any other thing (including under a provision that is itself repealed or amended);

in relation to any act done or omitted to be done, any state of affairs existing, or any period ending, before the amendment commences.

76 Saving of provisions about effect of assessments  
76 If a provision or part of a provision that is repealed or amended by Part 3 of this Schedule deals with the effect of an assessment, the repeal or amendment is disregarded in relation to assessments made, before or after the repeal or amendment commences, in relation to any act done or omitted to be done, any state of affairs existing, or any period ending, before the repeal or amendment commences.

77 Saving of provisions about general interest charge or shortfall interest charge  
77 If:


(a) a provision or part of a provision that is repealed or amended by Part 3 of this Schedule provides for the payment of:


(i) general interest charge or shortfall interest charge (within the meaning of the Income Tax Assessment Act 1997); or

(ii) interest under the Taxation (Interest on Overpayments and Early Payments) Act 1983; and


(b) in a particular case, the period in respect of which the charge or interest is payable (whether under the provision or under the Taxation Administration Act 1953) has not begun, or has begun but not ended, when the provision is repealed or amended;

then, despite the repeal or amendment, the provision or part continues to apply in the particular case until the end of the period.

78 Repeals disregarded for the purposes of dependent provisions  
78 If the operation of a provision (the subject provision) of any Act or legislative instrument depends to any extent on a provision of an Act, and that provision is repealed by Part 3 of this Schedule, the repeal is disregarded so far as it affects the operation of the subject provision.

79 Division does not limit operation of section 7 of the Acts Interpretation Act 1901  
79 This Division does not limit the operation of section 7 of the Acts Interpretation Act 1901.

]

177C(4)  

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To avoid doubt, paragraph (1)(a) applies to a scheme if:


(a) an amount of income is not included in the assessable income of the taxpayer of a year of income; and


(b) an amount would have been included, or might reasonably be expected to have been included, in the assessable income if the scheme had not been entered into or carried out; and


(c) instead, the taxpayer or any other taxpayer makes a discount capital gain (within the meaning of the Income Tax Assessment Act 1997) for that or any other year of income.

177C(5)  

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Subsection (4) does not limit the generality of any other provision of this Part.


 



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