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.
You have a choice of 2 methods to work out the decline in value of a
depreciating asset. You must choose to use either the
diminishing value method or the
prime cost method.
Once you make the choice for an asset, you cannot change it: see section
For the diminishing value method, see sections
. For the prime cost method, see section
In some cases you do not have to make the choice because you can deduct the asset
s cost: see section
S 40-65(1) amended by
No 55 of 2006
, s 3 and Sch 5 item 8, by substituting
sections 40-70 and 40-72
in note 2, effective 19 June 2006.
Exception: asset acquired from associate
depreciating asset that you acquire from an
associate of yours where the associate has deducted or can deduct an amount for the asset under this Division, you must use the same method that the associate was using.
You can require the associate to tell you which method the associate was using: see section
Exception: holder changes but user same or associate of former user
depreciating asset that you acquire from a former
holder of the asset, you must use the same method that the former holder was using for the asset if:
(a) the former holder or another entity (each of which is the
) was using the asset at a time before you became the holder; and
(b) while you hold the asset, the former user or an
associate of the former user uses the asset.
However, you must use the
diminishing value method if:
(a) you do not know, and cannot readily find out, which method the former holder was using; or
(b) the former holder did not use a method.
Exception: low-value pools
You work out the decline in value of a
depreciating asset in a low-value pool under Subdivision
rather than under this Subdivision.
Exception: also notionally deductible under R
(a) only one of the following events has happened:
(i) you have deducted one or more amounts under this Division for an asset;
(ii) you have been entitled under section
D) to one or more *tax offsets because you can deduct one or more amounts under section
for an asset; but
(b) later, the other event happens for the asset;
then, for the purposes of working out the deduction for the later event, you must choose the same method that you chose for the first event.
Deductions under section
(about decline in value of tangible depreciating assets used for R
D activities) are worked out using a notional application of this Division.
This subsection applies with changes if you have or could have deducted an amount under former section
Income Tax Assessment Act 1936
for the asset (see section
Income Tax (Transitional Provisions) Act 1997
S 40-65(6) substituted by No 93 of 2011, s 3 and Sch 3 item 17, effective 8 September 2011. For application, savings and transitional provisions see note under Div
heading. S 40-65(6) formerly read:
Exception: expenditure deductible under research and development provisions
40-65(6) If you can deduct an amount under section
Income Tax Assessment Act 1936
(or could if you had not chosen a tax offset under section
of that Act) for the asset:
(a) for a period before the first period for which you can deduct an amount for the asset under this Division; or
(b) for a period that starts at the same time as the first period for which you can deduct an amount for the asset under this Division;
you must, for the purposes of this Division, use the same method as you used, or use, for the asset for the purposes of working out the deduction under section 73BA.
S 40-65(6) inserted by No 170 of 2001.
(a) the events in paragraph (6)(a) could both arise for the same period for an asset; and
(b) neither event has already arisen for the asset;
then you must choose the same method for the purposes of working out the deduction for each event.
S 40-65(7) inserted by No 93 of 2011, s 3 and Sch 3 item 17, effective 8 September 2011. For application, savings and transitional provisions see note under Div
S 40-65 inserted by No 76 of 2001.