Section DV 2 — Income Tax Act 2007: Transfer of expenditure to master fund

DV 2 Transfer of expenditure to master fund When this section applies (1) This section applies when— (a) a superannuation fund (the member superannuation fund ) invests some or all of its funds in another superannuation fund (the master superannuation fund ); and (b) while the member superannuation fund has funds invested in the master superannuation fund, the member superannuation fund incurs expenditure of a kind described in subsection (2). Expenditure on publicising or managing (2) The expenditure is expenditure to which all the following apply: (a) it is incurred— (i) in developing, marketing, selling, promoting, or advertising the fund; or (ii) in managing the fund; and (b) it is not incurred in acquiring a building, equipment, land, machinery, or plant; and (c) it is assessable income of the recipient. When expenditure becomes master superannuation fund’s (3) The member superannuation fund may choose to treat some or all of the expenditure as expenditure incurred by the master superannuation fund in deriving assessable income. How election made (4) The member superannuation fund makes the election by giving notice to the Commissioner within 1 of the following times: (a) the time in which its return of income must be filed under section 37 of the Tax Administration Act 1994; or (b) a longer time allowed by the Commissioner. Effect of election (5) When the member superannuation fund makes an election, subsections (6) to (9) apply to the part or the whole, as chosen, of the expenditure. When expenditure incurred (6) The expenditure is treated as being incurred by the master superannuation fund as follows: (a) for a master fund that is a multi-rate PIE, in the income year in which the expenditure is transferred by the member superannuation fund; or (b) for other master funds, in the same income year as that in which it was incurred by the member superannuation fund. Deduction allowed to master superannuation fund (7) The master superannuation fund is allowed a deduction for the expenditure. The amount of the deduction is limited by subsection (8). Amount of deduction (8) The formula in section DV 3 is used to calculate the maximum deduction that the master superannuation fund is allowed for expenditure of the member superannuation fund treated as being incurred by the master superannuation fund. Amount of deduction when master fund is portfolio tax rate entity (8B) Despite subsection (8), a master superannuation fund that is a multi-rate PIE is allowed a deduction for expenditure transferred to it by a member superannuation fund. However, the maximum amount transferred must be no more than the member fund's share of the taxable income of the PIE for the income year in which the amount is transferred, any excess being treated as not transferred. Deducted expenditure not incurred by member superannuation fund (9) The expenditure for which the master superannuation fund is allowed a deduction is treated as not being incurred by the member superannuation fund. Link with subpart DA (10) The link between this section and subpart DA (General rules) is as follows: (a) for subsection (7),— (i) it supplements the general permission: (ii) it overrides the capital limitation and the exempt income limitation: (iii) the other general limitations still apply: (b) subsection (9) overrides the general permission. Defined in this Act: amount , assessable income , capital limitation , Commissioner , deduction , exempt income limitation , general limitation , general permission , income year , multi-rate PIE , notice , return of income , superannuation fund , supplement , Compare: 2004 No 35 s DV 2 Section DV 2(6): substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 102(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section DV 2(8B) heading: inserted (with effect on 1 April 2008), on 6 October 2009, by section 102(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section DV 2(8B): substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 102(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section DV 2 list of defined terms investor interest : repealed (with effect on 1 April 2010), on 21 December 2010, by section 43 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130). Section DV 2 list of defined terms multi-rate PIE : inserted, on 1 April 2010, by section 102(6)(b) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section DV 2 list of defined terms portfolio investor interest : repealed, on 1 April 2010, by section 102(6)(a) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section DV 2 list of defined terms portfolio tax rate entity : repealed, on 1 April 2010, by section 102(6)(a) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).