Taxation Laws Amendment Act (No. 1) 2001 (Cth)

Taxation Laws Amendment Act (No. 1) 2001

Act No. 72 of 2001 as amended

This compilation was prepared on 6 August 2002

[This Act was amended by Act No. 77 of 2001 and Act No. 57 of 2002]

Amendments from Act No. 77 of 2001 [Schedule 3 amended sections 240‑3(4), 240‑7(2), 240‑90(4), 240‑90(5) and 243‑35(3) Schedule 3 commenced on 30 June 2001] For transitional provision see Table A.

Amendments from Act No. 57 of 2002 [Schedule 12 (item 51) amended Item 9 of Schedule 2 Schedule 12 (item 52) amended Heading to Item 36 of Schedule 2 Schedule 12 (items 51 and 52) commenced on 30 June 2001]

Prepared by the Office of Legislative Drafting, Attorney‑General's Department, Canberra

Contents 1 Short title................................... 2 Commencement............................... 3 Schedule(s)..................................

Schedule 2—Arrangements treated as a sale and loan and limited recourse debt

Part 1—Insertion of Divisions 240 and 243 Income Tax Assessment Act 1997

Part 3‑10—Financial transactions Division 240—Arrangements treated as a sale and loan Guide to Division 240 240‑1.....................What this Division is about 240‑3......How the recharacterisation affects the notional seller 240‑7......How the recharacterisation affects the notional buyer Subdivision 240‑A—Application and scope of Division Operative provisions 240‑10....................Application of this Division 240‑15..........................Scope of Division Subdivision 240‑B—The notional sale and notional loan Operative provisions 240‑17.......Who is the notional seller and the notional buyer? 240‑20Notional sale of property by notional seller and notional acquisition of property by notional buyer 240‑25.......Notional loan by notional seller to notional buyer Subdivision 240‑C—Amounts to be included in notional seller's assessable income Guide to Subdivision 240‑C 240‑30..................What this Subdivision is about Operative provisions 240‑35 Amounts to be included in notional seller's assessable income 240‑40Arrangement payments not to be included in notional seller's assessable income Subdivision 240‑D—Deductions allowable to notional buyer Guide to Subdivision 240‑D 240‑45..................What this Subdivision is about Operative provisions 240‑50..Extent to which deductions are allowable to notional buyer 240‑55....Arrangement payments not to be allowable deductions Subdivision 240‑E—Notional interest and arrangement payments Operative provisions 240‑60...........................Notional interest 240‑65.......................Arrangement payments 240‑70...................Arrangement payment periods Subdivision 240‑F—The end of the arrangement Operative provisions 240‑75...............When is the end of the arrangement? 240‑78........................Termination amounts 240‑80...What happens if the arrangement is extended or renewed 240‑85What happens if an amount is paid by or on behalf of the notional buyer to acquire the property 240‑90What happens if the notional buyer ceases to have the right to use the property Subdivision 240‑G—Adjustments if total amount assessed to notional seller differs from amount of finance charge Guide to Subdivision 240‑G 240‑100..................What this Subdivision is about Operative provisions 240‑105.................Adjustments for notional seller 240‑110.................Adjustments for notional buyer Subdivision H—Application of Division 16E to certain arrangements 240‑112.........Division 16E applies to certain arrangements Subdivision 240‑I—Provisions applying to hire purchase agreements Operative provisions 240‑115Another person, or no person taken to own property in certain cases Division 243—Limited recourse debt Guide to Division 243 243‑10....................What this Division is about Subdivision 243‑A—Circumstances in which Division operates Operative provisions 243‑15..................When does this Division apply? 243‑20...................What is limited recourse debt? 243‑25.............When is a debt arrangement terminated? 243‑30.....What is the financed property and the debt property? Subdivision 243‑B—Working out the excessive deductions Operative provisions 243‑35..............Working out the excessive deductions Subdivision 243‑C—Amounts included in assessable income and deductions Operative provisions 243‑40........Amount included in debtor's assessable income 243‑45.........Deduction for later payments in respect of debt 243‑50..........Deduction for payments for replacement debt 243‑55...Effect of Division on later capital allowance deductions 243‑57Effect of Division on later capital allowance balancing adjustments 243‑58..Adjustment where debt only partially used for expenditure Subdivision 243‑D—Special provisions Operative provisions 243‑60.............Application of Division to partnerships 243‑65...........Application where partner reduces liability 243‑70Application of Division to companies ceasing to be 100% subsidiary 243‑75Application of Division where debt forgiveness rules also apply