any remaining amount can be deducted against assessable income from that arrangement that is MIT cross staple arrangement income. [Schedule 1, item 4, section 12451(4) of Schedule 1 to the TAA 1953] If the relevant entity is not a MIT, then the relevant asset entity is taken to be a MIT for the purpose of: working out whether its excepted MIT CSA income exceeds the amount of its concessional cross staple rent cap under section 12451; and determining the amount of assessable income that is MIT cross staple arrangement income under section 12454. [Schedule 1, item 4, subsections 12451(3) and 12454(4) of Schedule 1 to the TAA 1953] Existing staple arrangement with no agreed rent Assume the facts are the same as Example 1.1. In addition, assume that: Asset Entity is a MIT that (ignoring the application of the concessional cross staple rent cap and the expense allocation rule) had excepted MIT CSA income which is cross staple rent in relation to the economic infrastructure facility (Facility 1) of $60 million; the concessional cross staple rent cap was $55 million; Asset Entity had third party rental income in relation to a separate facility (Facility 2) it owned of $50 million; Asset Entity had deductible expenses of $20 million; and Entity’s net (taxable) income for the year was $90 million. When determining the amount of nonconcessional MIT income resulting from the breach of the concessional cross staple rent cap, Asset Entity must have regard to the expense allocation rule in section 12-454. Asset Entity had determined, based on the usual approach to the allocation of expenses, that expenses directly related to Facility 1 or Facility 2 are to be allocated directly against income from that Facility. Other indirect expenses are allocated on a prorata basis to the income. This allocation resulted in: $12 million of expenses being allocated against the rental income from Facility 1; and
any remaining amount can be deducted against assessable income from that arrangement that is MIT cross staple arrangement income. [Schedule 1, item 4, section 12451(4) of Schedule 1 to the TAA 1953] If the relevant entity is not a MIT, then the relevant asset entity is taken to be a MIT for the purpose of: working out whether its excepted MIT CSA income exceeds the amount of its concessional cross staple rent cap under section 12451; and determining the amount of assessable income that is MIT cross staple arrangement income under section 12454. [Schedule 1, item 4, subsections 12451(3) and 12454(4) of Schedule 1 to the TAA 1953] Existing staple arrangement with no agreed rent Assume the facts are the same as Example 1.1. In addition, assume that: Asset Entity is a MIT that (ignoring the application of the concessional cross staple rent cap and the expense allocation rule) had excepted MIT CSA income which is cross staple rent in relation to the economic infrastructure facility (Facility 1) of $60 million; the concessional cross staple rent cap was $55 million; Asset Entity had third party rental income in relation to a separate facility (Facility 2) it owned of $50 million; Asset Entity had deductible expenses of $20 million; and Entity’s net (taxable) income for the year was $90 million. When determining the amount of nonconcessional MIT income resulting from the breach of the concessional cross staple rent cap, Asset Entity must have regard to the expense allocation rule in section 12-454. Asset Entity had determined, based on the usual approach to the allocation of expenses, that expenses directly related to Facility 1 or Facility 2 are to be allocated directly against income from that Facility. Other indirect expenses are allocated on a prorata basis to the income. This allocation resulted in: $12 million of expenses being allocated against the rental income from Facility 1; and