Commonwealth Numbered Acts

INCOME TAX LAWS AMENDMENT ACT 1980 No. 19 of 1980 - SECT 6

6. (1) Where-

(a) an amount (in this sub-section referred to as the "relevant amount") is
included in the assessable income of a taxpayer (in this sub-section referred
to as the "recipient taxpayer") of the year of income that commenced on 1 July
1978 (in this sub-section referred to as the "relevant year of income");

   (b)  the relevant amount is a loss, outgoing or expenditure (which loss,
outgoing or expenditure is in this sub-section referred to as the "relevant
expenditure") incurred (whether before or after the commencement of this
section) to the recipient taxpayer by another taxpayer (in this sub-section
referred to as the "associated taxpayer");

   (c)  but for this sub-section, a deduction would be allowable to the
        associated taxpayer in relation to a year of income in respect of the
        whole or a part of the relevant expenditure;

   (d)  if the relevant amount were not included in the assessable income of
        the recipient taxpayer of the relevant year of income, the
        recipient taxpayer would be deemed to have incurred a loss in the
        relevant year of income;

   (e)  if, in determining whether the recipient taxpayer is deemed to have
        incurred a loss in the relevant year of income and in determining the
        amount of any such loss-

        (i)    the relevant amount were not included in the assessable income
               of the recipient taxpayer of the relevant year of income; and

        (ii)   the conditions specified in the paragraphs of sub-section 80
               (5) of the Income Tax Assessment Act 1936, as amended and in
               force immediately after the commencement of this section, were
               taken to be applicable, the recipient taxpayer would not be
               deemed to have incurred a loss in the relevant year of income
               or would be deemed to have incurred a loss in the
               relevant year of income of an amount less than the amount of
               the loss referred to in paragraph (d); and

   (f)  the associated taxpayer incurred the whole or a part of the relevant
        expenditure (which whole or part is in this sub-section referred to as
        the

"prescribed relevant expenditure") to the recipient taxpayer for the purpose,
or for purposes that included the purpose, of wholly or partly preventing the
operation of any of the relevant loss provisions in relation to the recipient
taxpayer or, if the recipient taxpayer is a partnership, in relation to a
partner or partners in the partnership, by securing that the recipient
taxpayer would not be deemed to have incurred a loss in the relevant year of
income or would be deemed to have incurred a loss in the relevant year of
income of an amount less than the amount of the loss that the recipient
taxpayer would be deemed to have incurred in the relevant year of income if an
amount equal to the prescribed relevant expenditure were not included in the
assessable income of the recipient taxpayer of the relevant year of income,
then, notwithstanding anything contained in the Income Tax Assessment Act 
1936 , a deduction is not allowable to the associated taxpayer in respect of
any part of the prescribed relevant expenditure.

(2) Where-

   (a)  the value of the trading stock of a taxpayer that, but for this
        sub-section, would be taken into account at the end of the year of
        income that
commenced on 1 July 1978 (in this sub-section referred to as the "relevant
year of income") for the purposes of the Income Tax Assessment Act 1936 is
greater than the value of that trading stock that would be taken into account
at that time if the taxpayer had valued that trading stock in such a way that
the value of that trading stock to be taken into account at that time would
have been the lowest possible amount at which the value of that trading stock
could be taken into account at that time in accordance with Subdivision B of
Division 2 of Part III of the Income Tax Assessment Act 1936;

   (b)  if the taxpayer had valued the trading stock of the taxpayer in such a
        way that the value of that trading stock to be taken into account at
        the end of the relevant year of income would have been the lowest
        possible amount at which the value of that trading stock could have
        been taken into account at that time in accordance with Subdivision B
        of Division 2 of Part III of the Income Tax Assessment Act 1936, the
        taxpayer would have been deemed to have incurred a loss in the
        relevant year of income;

   (c)  if, in determining whether the taxpayer is deemed to have incurred a
        loss in the relevant year of income and in determining the amount of
        any such loss-

        (i)    the value of the trading stock of the taxpayer to be taken into
               account at the end of the relevant year of income were the
               value referred to in paragraph (b); and

        (ii)   the conditions specified in the paragraphs of sub-section 80
               (5) of the Income Tax Assessment Act 1936, as amended and in
               force immediately after the commencement of this section, were
               taken to be applicable, the taxpayer would not be deemed to
               have incurred a loss in the relevant year of income or would be
               deemed to have incurred a loss in the relevant year of income
               of an amount less than the amount of the loss referred to in
               paragraph (b); and

   (d)  some or all of the trading stock was valued by the taxpayer in the way
        in which it was valued by the taxpayer for the purpose, or for
        purposes that included the purpose, of wholly or partly preventing the
        operation of any of the relevant loss provisions in relation to the
        taxpayer or, if the taxpayer is a partnership, in relation to a
        partner or partners in the partnership, by securing that the taxpayer
        would not be deemed to have incurred a loss in the
        relevant year of income or would be deemed to have incurred a loss in
        the relevant year of income of an amount less than the amount of the
        loss that the taxpayer would be deemed to have incurred in the
        relevant year of income if the trading stock of the taxpayer had been
        valued by the taxpayer at a lesser value, then, notwithstanding
        anything contained in the Income Tax Assessment Act  1936 , the value
        of the trading stock of the taxpayer to be taken into account at the
        end of the relevant year of income and at the commencement of the next
        succeeding year of income is-

   (e)  in a case to which paragraph (f) does not apply-the value referred to
        in paragraph (b); or

   (f)  if the taxpayer satisfies the Commissioner that, if the taxpayer had
        not valued any of the trading stock of the taxpayer for the purpose,
        or for purposes that included the purpose, mentioned in paragraph (d),
        the taxpayer might reasonably be expected to have valued the trading
        stock of the taxpayer in such a way that the value of the trading
        stock of the taxpayer to be taken into account at the end of the
        relevant year of income would be greater than the value of the trading
        stock referred to in paragraph (b)-that greater value.

(3) In sub-section (2)-

   (a)  a reference to trading stock shall be read as not including a
        reference to live stock; and

   (b)  a reference to the valuation of trading stock by a taxpayer shall be
        read as a reference to the exercise by the taxpayer of an option or
        options under section 31 of the Income Tax Assessment Act 1936 in
        relation to the trading stock of the taxpayer.

(4) A reference in the preceding provisions of this section (other than the
reference in paragraph (1) (b)), in relation to a taxpayer, to a loss shall be
read as a reference to-

   (a)  in a case where the taxpayer is a partnership that is being treated as
        a taxpayer for the purposes of section 90 of the
        Income Tax Assessment Act  1936-a partnership loss for the purposes of
        section 92 of the Income Tax  Assessment Act 1936 ; and

   (b)  in any other case-a loss for the purposes of section 80 or 80AA of the
        Income Tax Assessment Act 1936.
(5) In this section, "relevant loss provisions" means-

   (a)  sections 3 and 4 of the Income Tax Assessment Amendment Act (No. 5) 
        1979 ;

   (b)  section 13 of the Income Tax Laws Amendment Act 1979; and

   (c)  section 5 of this Act.

(6) This section has effect notwithstanding section 5 of the Income Tax 
Assessment Amendment Act (No. 5) 1979 and section 14 of the Income Tax Laws 
Amendment Act 1979 .

(7) Notwithstanding anything contained in the Income Tax Assessment Act  1936
, the Commissioner may amend an assessment for the purpose of giving effect to
this section if the amendment is made within 3 years after the date on which
the tax became due and payable under the assessment, but nothing in this
sub-section limits the power of the Commissioner to amend an assessment in
accordance with the provisions of that Act.