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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 40-300  Meaning of termination value  

 View history reference ITAA 36

40-300(1)  

The termination value of a * depreciating asset is worked out as at the time when the * balancing adjustment event occurs. It is:


(a) if an item in the table in subsection (2) applies - the amount specified in that item; or


(b) otherwise - the amount you are taken to have received under section 40-305 for the asset.

Note:

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.

40-300(2)  

 View history reference
If more than one item applies, use the value under the last applicable item.
Termination value table
ItemFor this balancing adjustment event:The termination value is:
1You stop using a *depreciating asset, or having it *installed ready for use, for any purpose and you expect never to use it again even though you still *hold itThe *market value of the asset when you stopped using it or having it *installed ready for use
.......... .
2You decide never to use a *depreciating asset that you have not used even though you still *hold itThe *market value of the asset when you make the decision
.......... .
3You stop using *in-house software for any purpose and you expect never to use it again even though you still *hold itZero
.......... .
4You decide never to use *in-house software that you have not used even though you still *hold itZero
.......... .
5One or more partners stop holding a *depreciating asset when it becomes a partnership asset or a *balancing adjustment event referred to in subsection 40-295(2) occursThe *market value of the asset when the partnership started to *hold it or when the balancing adjustment event occurred
.......... .
6You stop *holding a *depreciating asset under an *arrangement and:The market value of the asset just before you stopped holding it
 (a)there is at least one other party to the arrangement with whom you did not deal at *arm ' s length; and 
 (b)apart from this item, the *termination value would be less than its *market value 
.......... .
7You stop *holding a *depreciating asset under an *arrangement that was private or domestic in nature to you (for example, a gift)The *market value of the asset just before you stopped *holding it
.......... .
8A *depreciating asset is lost or destroyedThe amount or value received or receivable under an insurance policy or otherwise for the loss or destruction
.......... .
9You stop *holding a *depreciating asset because you die and the asset starts being held by the *legal personal representativeThe asset ' s *adjustable value on the day you died or, if the asset is allocated to a low-value pool, so much of the *closing pool balance for the income year in which you died as is reasonably attributable to the asset
.......... .
10You stop *holding a *depreciating asset because it *passes directly to a beneficiary or joint tenant when you dieThe *market value of the asset on the day you die
.......... .
11A *depreciating asset for which the *Finance Minister has determined an amount for you under section 52A of the Airports (Transitional) Act 1996The amount so determined
.......... .
12(Repealed by No 96 of 2014) 
13The *balancing adjustment event occurs under subsection 40-295(1A)Zero
..........
14The *balancing adjustment event occurs under subsection 40-295(1B)What would, apart from subsection 40-285(3), be the asset ' s *adjustable value on the day the *balancing adjustment event occurs

40-300(3)  

 View history reference
The termination value of a * depreciating asset does not include an amount that is included in assessable income as * ordinary income under section 6-5 or as * statutory income under section 6-10 (except an amount that is statutory income under this Division).

Note 1:

Termination value may be adjusted under Subdivision 27-B so that any GST consequences are accounted for.

Note 2:

Termination value may be reduced under section 40-1105 to account for exploration benefits received under farm-in farm-out arrangements.


 



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