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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-G - Capital expenditure of primary producers and other landholders    View history reference

Operative provisions

SECTION 40-650  Amounts you cannot deduct under this Subdivision  

 View history reference ITAA 36

40-650(1)  

You cannot deduct amounts for capital expenditure you incur on * connecting power to land or upgrading the connection if, during the 12 months after electricity is first supplied to the land as a result of the expenditure, no electricity supplied as a result of the expenditure is used in carrying on a * business on the land for a * taxable purpose.

40-650(2)  

If you deducted an amount for any income year under this Subdivision for the expenditure, your assessment for that income year may be amended under section 170 of the Income Tax Assessment Act 1936 to disallow the deduction.

40-650(3)  

You cannot deduct an amount for capital expenditure you incur on * connecting power to land or upgrading the connection for:


(a) expenditure in providing water, light or power for use on, access to or communication with the site of * mining and quarrying operations; or
 View history reference


(b) a contribution to the cost of providing water, light or power for those operations.
 View history reference

40-650(4)  

You cannot deduct an amount for any income year for your capital expenditure on a part of a telephone line if:


(a) any entity has deducted, or can deduct, an amount for any income year for the cost of that part under a provision of this Act (except this Subdivision); or


(b) the cost of that part has been, or must be, taken into account in working out:


(i) the amount of any entity ' s deduction (including a deduction for a * depreciating asset) for any income year under a provision of this Act (except this Subdivision); or

(ii) the net income, or partnership loss, of a partnership under section 90 of the Income Tax Assessment Act 1936 .

40-650(5)  

However, you can deduct an amount under this Subdivision for your expenditure on a part of a telephone line even if:


(a) an entity that worked on installing that part has deducted, or can deduct, an amount relating to that part for any income year under this Act (except this Subdivision); or


(b) the cost of that part has been, or must be, taken into account:


(i) in working out the amount of such an entity ' s deduction for any income year under a provision of this Act (except this Subdivision); or

(ii) under section 90 of the Income Tax Assessment Act 1936 in working out the net income, or partnership loss, of a partnership that worked on installing that part.

40-650(6)  

Subsection (5) has effect whether the entity did the work itself or through one or more employees or * agents.

40-650(7)  

If you can deduct, or have deducted, an amount for any income year under section 40-645 for your expenditure:


(a) an entity cannot deduct an amount for any income year under a provision of this Act (except this Subdivision) for the expenditure; and


(b) the expenditure cannot be taken into account to work out the amount of an entity ' s deduction for any income year under a provision of this Act (except this Subdivision).

40-650(8)  

Subsection (7) also applies in working out the net income, or partnership loss, of a partnership under section 90 of the Income Tax Assessment Act 1936 .


 



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