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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

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.

Subdivision 40-F - Primary production depreciating assets    View history reference

Operative provisions

SECTION 40-545  How you work out the decline in value for horticultural plants  

 View history reference ITAA 36

40-545(1)  

The decline in value of a * horticultural plant for the income year in which it starts to decline in value is all of the capital expenditure attributable to the establishment of the plant if its * effective life is less than 3 years.

40-545(2)  

You work out the decline in value for an income year of a * horticultural plant whose * effective life is 3 years or more in this way:
 Establishment
expenditure
×Write-off days in income year
365
×Write-off rate 

where:

establishment expenditure is the amount of capital expenditure incurred that is attributable to the establishment of the * horticultural plant.

write-off days in income year is the number of days in the income year on which you satisfied a condition in subsection 40-525(2) for the plant and either used it for * commercial horticulture or held it ready for that use.

write-off rate is the rate shown in this table for the * horticultural plant according to its * effective life.
Write-off rate for horticultural plant
ItemEffective life of:The write-off rate is:
13 to fewer than 5 years40%
.......... .
25 to fewer than 6 2/3 years27%
.......... .
36 2/3 to fewer than 10 years20%
.......... .
410 to fewer than 13 years17%
.......... .
513 to fewer than 30 years13%
.......... .
630 years or more7%

Limit on write-off days

40-545(3)  

Disregard your use of the * horticultural plant on a day outside the period that:


(a) starts when the plant can first be used for * commercial horticulture; and


(b) extends for the time shown in this table (depending on the plant's * effective life).
Period after which you cannot count use of horticultural plant
ItemEffective life:Time limit:
13 to fewer than 5 years2 years and 183 days
.......... .
25 to fewer than 6 2/3 years3 years and 257 days
.......... .
36 2/3 to fewer than 10 years5 years
.......... .
410 to fewer than 13 years5 years and 323 days
.......... .
513 to fewer than 30 years7 years and 253 days
.......... .
630 years or more14 years and 105 days


 



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