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INCOME TAX ASSESSMENT ACT 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-10 - CAPITAL ALLOWANCES: RULES ABOUT DEDUCTIBILITY OF CAPITAL EXPENDITURE  

Division 40 - Capital allowances    View history reference

Subdivision 40-D - Balancing adjustments    View history reference

Commissioner ' s Remedial Power

Note: A Commissioner ' s Remedial Power (CRP 2017/2) is relevant to this part of the tax law. Taxation Administration (Remedial Power - Small Business Restructure Roll-over) Determination 2017 (F2017L01687) modifies the operation of s 40-340 of the Income Tax Assessment Act 1997 and any other provisions of a taxation law whose operation is affected by the modified operation of s 40-340 in relation to an asset transferred under a small business restructure roll-over (item 8 of the table in s 40-340(1) ).

The operation of the relevant provisions is modified as follows:

If s 40-340 of ITAA 1997 provides for rollover relief in relation to a disposal of a depreciating asset because the condition in item 8 of the table in s 40-340(1) of ITAA 1997 is satisfied in relation to the asset, that section has effect as if it also provided that the disposal of the asset has no direct consequences under the income tax law (other than Div 40 of ITAA 1997).

The modification applies in respect of transfers on or after 8 May 2018.

An entity must treat a modification as not applying to it or any other entity if the modification would produce a less favourable result for it. The Commissioner is empowered by s 370-5 of Sch 1 to the Taxation Administration Act 1953 to make modifications, by legislative instrument, to ensure the law is administered to achieve its intended purpose or object.

Operative provisions

SECTION 40-290  Reduction for non-taxable use  

 View history reference ITAA 36

40-290(1)  

You must reduce the amount (the balancing adjustment amount ) included in your assessable income, or the amount you can deduct, under section 40-285 for a * depreciating asset if your deductions for the asset have been reduced under section 40-25 .

40-290(2)  

The reduction is:
 Sum of reductions
Total decline
×Balancing adjustment amount 

where:

sum of reductions is the sum of:


(a) the reductions in your deductions for the asset under section 40-25 ; and


(b) if there has been roll-over relief for the asset under section 40-340 - the reductions in deductions for the asset for the transferor or an earlier successive transferor under section 40-25 ; and


(c) if you * hold the asset as the * legal personal representative of an individual - the reductions in deductions for the asset for the individual under section 40-25 .

total decline is the sum of:


(a) the decline in value of the * depreciating asset since you started to * hold it; and


(b) if there has been roll-over relief for the asset under section 40-340 - the decline in value of the asset for the transferor or an earlier successive transferor; and


(c) if you * hold the asset as the * legal personal representative of an individual - the decline in value of the asset for the individual.

40-290(3)  

You must further reduce the amount included in your assessable income, or the amount you can deduct, under section 40-285 for a * depreciating asset (the current asset ) if:


(a) the asset ' s * cost (for you) was worked out under section 40-205 (Cost of a split depreciating asset) or 40-210 (Cost of merged depreciating assets); and


(b) you used the depreciating asset from which the current asset was split, or a depreciating asset that was merged into the current asset, or had it * installed ready for use, for a purpose other than a * taxable purpose.

40-290(4)  

The further reduction is such amount as is reasonable having regard to the extent of the use referred to in paragraph (3)(b).

Exception: mining, quarrying or prospecting information

40-290(5)  

 View history reference
This section does not apply to *mining, quarrying or prospecting information.


 



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