INCOME TAX ASSESSMENT ACT 1997
LIABILITY RULES OF GENERAL APPLICATION
CAPITAL ALLOWANCES: RULES ABOUT DEDUCTIBILITY OF CAPITAL EXPENDITURE
Div 40 substituted for Divs 40, 41 and 42 by No 76 of 2001.
s Remedial Power
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
Income Tax Assessment Act 1997
and any other provisions of a taxation law whose operation is affected by the modified operation of s
in relation to an asset transferred under a small business restructure roll-over (item 8 of the table in s
The operation of the relevant provisions is modified as follows:
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
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
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
Taxation Administration Act 1953
to make modifications, by legislative instrument, to ensure the law is administered to achieve its intended purpose or object.
Subdiv 40-B substituted by No 76 of 2001.
Use this table to work out who
depreciating asset. An entity identified in column 3 of an item in the table as
a depreciating asset cannot
the asset under another item.
|Identifying the holder of a depreciating asset|
|Item||This kind of depreciating asset:||Is held by this entity:|
|1||A *car in respect of which a lease has been granted that was a *luxury car when the lessor first leased it||The lessee (while the lessee has the *right to use the car) and
|2||A *depreciating asset that is fixed to land subject to a *quasi-ownership right (including any extension or renewal of such a right) where the owner of the right has a right to remove the asset||The owner of the quasi-ownership right (while the right to remove exists)|
|3||An improvement to land (whether a fixture or not) subject to a *quasi-ownership right (including any extension or renewal of such a right) made, or itself improved, by any owner of the right for the owner
s own use where the owner of the right has no right to remove the asset||The owner of the quasi-ownership right (while it exists)|
|4||A *depreciating asset that is subject to a lease where the asset is fixed to land and the lessor has the right to recover the asset||The lessor (while the right to recover exists)|
|5||A right that an entity legally owns but which another entity (the
) exercises or has a right to exercise immediately, where the economic owner has a right to become its legal owner and it is reasonable to expect that:||The economic owner and
the legal owner|
| ||(a)||the economic owner will become its legal owner; or|| |
| ||(b)||it will be disposed of at the direction and for the benefit of the economic owner|| |
|6||A *depreciating asset that an entity (the
) would, apart from this item, hold under this table (including by another application of this item) where a second entity (also the
):||The economic owner and
the former holder|
| ||(a)||possesses the asset, or has a right as against the former holder to possess the asset immediately; and|| |
| ||(b)||has a right as against the former holder the exercise of which would make the economic owner the holder under any item of this table;|| |
| ||and it is reasonable to expect that the economic owner will become its holder by exercising the right, or that the asset will be disposed of at the direction and for the benefit of the economic owner|| |
|7||A *depreciating asset that is a partnership asset||The partnership and
any particular partner|
|8||*Mining, quarrying or prospecting information that an entity has and that is relevant to:||The entity|
| ||(a)||*mining and quarrying operations carried on, or proposed to be carried on by the entity; or|| |
| ||(b)||a *business carried on by the entity that includes *exploration or prospecting for *minerals or quarry materials obtainable by such operations;|| |
| ||whether or not it is generally available|| |
|9||Other *mining quarrying or prospecting information that an entity has and that is not generally available||The entity|
|9A||(Repealed by No 96 of 2014)|| |
|10||Any *depreciating asset||The owner, or the legal owner if there is both a legal and equitable owner|
Power Finance leases a luxury car to Kris who subleases it to Rachael. As lessee, item 1 makes Rachael the holder of the car. Power, as the legal owner, would normally hold the car under item 10.
However, item 1 makes it clear that Power, as lessor, does
hold the car. As the lessee, item 1 would normally mean that Kris held the car but, again, she is also a lessor and so is not the holder (she also doesn
t have the right to use the car during the sublease).
Sandra sells a packing machine to Jenny under a hire purchase agreement. Jenny holds the machine under item 6 because, although she is not the legal owner until she exercises her option to purchase, she possesses the machine now and can exercise an option to become its legal owner.
Jenny is reasonably expected to exercise that option because the final payment will be well below the expected market value of the machine at the end of the agreement. Sandra, as the machine
s legal owner, would normally be its holder under item 10 but item 6 makes it clear that the legal owner is
Some assets may have holders under more than one item in the table.
As well as hire purchase agreements, items 5 and 6 cover cases like assets subject to chattel mortgages, sales subject to retention of title clauses and assets subject to bare trusts.
S 40-40 amended by No 96 of 2014, s 3 and Sch 5 item 6, by repealing table item 9A, effective 30 September 2014. Table item 9A formerly read:
9A||*Geothermal exploration information that an entity has and that is relevant to:
(a) *geothermal energy extraction carried on, or proposed to be carried on, by the entity; or
(b) a *business carried on by the entity that includes *exploration or prospecting for *geothermal energy resources from which energy can be extracted by geothermal energy extraction;
whether or not the information is generally available
S 40-40 amended by No 84 of 2013, s 3 and Sch 3 item 6, by inserting table item 9A, applicable to depreciating assets whose start time is on or after 1 July 2012.
S 40-40 amended by No 14 of 2012, s 3 and Sch 3 item 10, by substituting
*mining and quarrying operations
in table item 8, effective 1 July 2012. For application and transitional provisions see note under s
S 40-40 amended by
No 79 of 2010
, s 3 and Sch 3 item 14, by substituting table item 1, effective 1 July 2010. Table item 1 formerly read:
A *luxury car in respect of which a lease has been granted
The lessee (while the lessee has the right to use the car) and
S 40-40 inserted by No 76 of 2001.