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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 40-305  Amount you are taken to have received under a balancing adjustment event  

 View history reference ITAA 36

40-305(1)  

This Division applies to you as if you had received, under a * balancing adjustment event, the greater of these amounts:


(a) the sum of the amounts you have deducted or can deduct, or has been or will be taken into account in working out an amount you can deduct because of the balancing adjustment event and any amount by which the amount so deductible was reduced because of a case described in the table in this subsection; and


(b) the sum of the applicable amounts set out in that table:
Amount you are taken to have received under a balancing adjustment event
ItemIn this case:The amount is:
1You receive an amountThe amount
.......... .
2You terminate all or part of a liability to pay an amountThe amount of the liability or part when you terminate it
.......... .
3You are granted a right to receive an amount or an amount to which you are entitled is increasedThe amount of the right or increase when it is granted or increased
.......... .
4You receive a *non-cash benefitThe *market value of the non-cash benefit when it is received
.......... .
5You terminate all or part of a liability to provide a *non-cash benefitThe *market value of the non-cash benefit or reduction in the non-cash benefit when the liability or part is terminated
.......... .
6You are granted a right to receive a *non-cash benefit or you become entitled to an increased non-cash benefitThe *market value of the non-cash benefit, or the increase, when it is granted or increased

Note 1:

Item 1 includes not only amounts actually received but also amounts taken to have been received. Examples include the price of the notional sale made when a depreciating asset is converted to trading stock under section 70-30 , the consideration for an asset held under a hire purchase arrangement under section 240-25 and a lessee ' s deemed consideration when a luxury car lease ends under subsection 242-90(3) .

Note 2:

Section 230-505 provides special rules for working out the amount of consideration for an asset if the asset is a Division 230 financial arrangement or a Division 230 financial arrangement is involved in that consideration.

40-305(2)  

In applying the table in subsection (1) to a right you have to receive an amount or a * non-cash benefit, don ' t count any part of the right that has already been satisfied.


 



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