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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

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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