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This is a Bill, not an Act. For current law, see the Acts databases.
1998-1999-2000-2001
The
Parliament of the
Commonwealth of
Australia
HOUSE OF
REPRESENTATIVES
Presented and read a first
time
New Business
Tax System (Capital Allowances—Transitional and Consequential) Bill
2001
No. ,
2001
(Treasury)
A Bill
for an Act to A Bill for an Act to implement the New Business Tax System by
amending the law relating to taxation, and for related
purposes
ISBN: 0642 459180
Contents
Income Tax (Transitional Provisions) Act
1997 3
Airports (Transitional) Act
1996 29
A New Tax System (Goods and Services Tax) Act
1999 32
A New Tax System (Luxury Car Tax) Act
1999 33
Bounty and Capitalisation Grants (Textile Yarns) Act
1981 33
Bounty (Computers) Act
1984 33
Bounty (Machine Tools and Robots) Act
1985 34
Defence Act
1903 34
Income Tax Assessment Act
1936 34
Income Tax Assessment Act
1997 62
Income Tax Rates Act
1986 132
Social Security Act
1991 133
Veterans’ Entitlements Act
1986 133
Taxation Laws Amendment Act (No. 1)
2001 136
A Bill for an Act to A Bill for an Act to implement the
New Business Tax System by amending the law relating to taxation, and for
related purposes
The Parliament of Australia enacts:
This Act may be cited as the New Business Tax System (Capital
Allowances—Transitional and Consequential) Act 2001.
(1) Subject to subsection (2), this Act commences on the day on which
it receives the Royal Assent.
(2) Schedule 3 commences, or is taken to have commenced, just after
the commencement of the Taxation Laws Amendment Act (No. 1)
2001.
Subject to section 2, each Act that is specified in a Schedule to
this Act is amended or repealed as set out in the applicable items in the
Schedule concerned, and any other item in a Schedule to this Act has effect
according to its terms.
Income Tax (Transitional
Provisions) Act 1997
1 Before Division 41
Insert:
Table of Subdivisions
40-B Core provisions
40-C Cost
40-D Balancing adjustments
40-E Low-value and software development pools
40-F Primary production depreciating assets
40-G Capital expenditure of primary producers and other
landholders
40-I Capital expenditure that is deductible over time
Table of sections
40-10 Plant
40-15 Recalculating effective life
40-20 IRUs
40-25 Software
40-30 Spectrum licences
40-33 Datacasting transmitter licences
40-35 Mining unrecouped expenditure
40-40 Transport expenditure
40-45 Intellectual property
40-50 Forestry roads and timber mill
buildings
40-55 Environmental impact assessment
40-60 Pooling under Subdivision 42-L of the former
Act
40-65 Substituted accounting periods
40-70 References to amounts deducted and reductions in
deductions
40-75 Mining expenditure incurred after 1 July 2001 on
an asset
40-80 Other expenditure incurred after 1 July 2001 on a
depreciating asset
(1) This section applies to you if:
(a) you have deducted or can deduct amounts for plant under
Division 42 of the Income Tax Assessment Act 1997 (the former
Act) as in force just before it was amended by the New Business Tax
System (Capital Allowances) Act 2001, or you could have deducted amounts
under that Division for the plant if you had used it, or had it installed ready
for use, for the purpose of producing assessable income before that day;
and
(b) either:
(i) you hold the plant at 1 July 2001; or
(ii) subparagraph (i) does not apply and you were the owner or
quasi-owner of the plant at the end of 30 June 2001.
(2) Division 40 of the Income Tax Assessment Act 1997 as
amended by the New Business Tax System (Capital Allowances) Act 2001 (the
new Act) applies to the plant on this basis:
(a) the amount that was your undeducted cost at the end of 30 June
2001 becomes the plant’s opening adjustable value; and
(b) you use the same cost, effective life and method that you were using
under Division 42 of the former Act; and
(c) if you excluded an amount from your assessable income under
section 42-290 of the former Act for a balancing adjustment event that
occurred on or before 11.45 am, by legal time in the Australian Capital
Territory, on 21 September 1999—the cost of the plant, and its
opening adjustable value, are reduced by that amount; and
(d) if subparagraph (1)(b)(ii) applies to you—you are treated
as the holder of the plant while you are its holder or while the circumstances
under which you would have been the owner or quasi-owner of the plant under the
former Act continue.
Note: There are special rules for entities that have
substituted accounting periods: see section 40-65.
(3) If you were using a rate for the plant under subsection 42-160(1) or
42-165(1) of the former Act just before 1 July 2001, or would have been
using such a rate if you had used it, or had it installed ready for use, for the
purpose of producing assessable income before that day, Division 40 of the
new Act applies to the plant on this basis:
(a) for the diminishing value method—replace the component in the
formula in subsection 40-70(1) of the new Act that includes the plant’s
effective life with the rate you were using; and
(b) for the prime cost method:
(i) replace the component in the formula in subsection 40-75(1) of the new
Act that includes the plant’s effective life with the rate you were using;
and
(ii) increase the plant’s cost under Division 42 of the former
Act by any amounts included in the second element of the plant’s cost
after 30 June 2001.
Note 1: Recalculating effective life will have no practical
effect for an entity to whom subsection (3) applies because the component
in the relevant formula that relies on effective life has been
replaced.
Note 2: STS taxpayers work out the decline in value of their
depreciating assets under Division 328.
You cannot recalculate the effective life of a depreciating asset for
which:
(a) you were using, just before 1 July 2001, a rate under subsection
42-160(1) or 42-165(1) of the former Act; or
(b) you would have been using such a rate if you had used the asset, or
had it installed ready for use, for the purpose of producing assessable income
before that day.
(1) This section applies to you if:
(a) you have deducted or can deduct an amount for an IRU under
Division 44 of the former Act; and
(b) you hold the IRU at 1 July 2001.
(2) Division 40 of the new Act applies to the IRU on this
basis:
(a) you use the cost, effective life and method you were using under
Division 44 of the former Act; and
(b) the amount that was your undeducted cost of the IRU at the end of
30 June 2001 becomes the IRU’s opening adjustable value.
Note: There are special rules for entities that have
substituted accounting periods: see section 40-65.
(1) Despite its repeal by this Act, Division 46 of the former Act
continues to apply to expenditure on software that you incurred and that was in
a software pool under that Division at the end of 30 June 2001.
(2) For a unit of software for which you were deducting amounts under
Subdivision 46-B of the former Act, Subdivision 40-B of the new Act
applies to the unit on this basis:
(a) its cost is the amount of expenditure you incurred on the unit;
and
(b) you must use the prime cost method; and
(c) its opening adjustable value at 1 July 2001 is its undeducted
cost at the end of 30 June 2001; and
(d) you must use the same effective life you were using under
Subdivision 46-B of the former Act.
Note: There are special rules for entities that have
substituted accounting periods: see section 40-65.
(1) This section applies to you if you have deducted or can deduct an
amount under Division 380 of the former Act for expenditure incurred in
obtaining a spectrum licence on or before 30 June 2001.
(2) Subdivision 40-B of the new Act applies to the spectrum licence
on this basis:
(a) its cost is your expenditure incurred in obtaining the licence;
and
(b) its opening adjustable value at 1 July 2001 is the amount of
unrecouped expenditure for the licence at the end of 30 June 2001;
and
(c) its effective life is the same as it had under the former Act;
and
(d) you must use the prime cost method.
Note: There are special rules for entities that have
substituted accounting periods: see section 40-65.
(1) This section applies to you if you hold a datacasting transmitter
licence at 1 July 2001.
(2) Division 40 of the new Act applies to the licence on this
basis:
(a) its cost is your expenditure incurred in obtaining the licence;
and
(b) its opening adjustable value at 1 July 2001 is its cost;
and
(c) its effective life is 15 years less any period that has elapsed from
the day the licence was issued until 1 July 2001; and
(d) you must use the prime cost method.
(1) This section applies to you if you have an amount of unrecouped
expenditure under Division 330 of the former Act at the end of 30 June
2001.
(2) Division 40 of the new Act applies to the expenditure as if it
were a depreciating asset you hold on this basis:
(a) it has an opening adjustable value at 1 July 2001 equal to the
amount of unrecouped expenditure; and
(b) it has a cost equal to the total amount of allowable capital
expenditure under the former Act; and
(c) in applying the formula in section 40-75 of the new Act for the
income year in which 1 July 2001 occurs—you use the adjustments in
subsection 40-75(3) of the new Act; and
(d) it is taken to have been used for a taxable purpose at the start of
1 July 2001; and
(e) it has a remaining effective life worked out under
subsection (3); and
(f) you must use the prime cost method.
Note: There are special rules for entities that have
substituted accounting periods: see section 40-65.
(3) The remaining effective life of a depreciating asset mentioned in
subsection (2) at the start of an income year (present income
year) for which you are working out its decline in value is:
(a) for an amount of unrecouped expenditure in respect of expenditure
incurred in carrying on eligible mining operations other than in the course of
petroleum mining is the lesser of these:
(i) the number equal to the difference between 10 and the number of income
years (which may be zero) before the present income year for which an amount in
respect of expenditure was deductible;
(ii) the number equal to the number of whole years in the estimated life
of the mine, or proposed mine, on the mining property, or, if there is more than
one such mine, of the mine that has the longest estimated life, as at the end of
the present income year; or
(b) for an amount of unrecouped expenditure in respect of expenditure
incurred in carrying on eligible mining operations in the course of petroleum
mining is the lesser of these:
(i) the number equal to the difference between 10 and the number of income
years (which may be zero) before the present income year for which an amount in
respect of expenditure was deductible;
(ii) the number equal to the number of whole years in the estimated life
of the petroleum field or proposed petroleum field as at the end of the present
income year; or
(c) for an amount of unrecouped expenditure in respect of expenditure
incurred in carrying on eligible quarrying operations the lesser of
these:
(i) the number equal to the difference between 20 and the number of income
years (which may be zero) before the present income year for which an amount in
respect of expenditure was deductible; and
(ii) the number equal to the number of whole years in the estimated life
of the quarry, or proposed quarry, on the quarrying property, or, if there is
more than one such quarry, of the quarry that has the longest estimated life, as
at the end of the present income year.
(4) Sections 40-95 and 40-110 of the new Act do not apply to the
unrecouped expenditure.
(5) The asset’s opening adjustable value for an income year (the
reduction year) is reduced if, in the previous income year (but
not your income year in which 30 June 2001 occurs):
(a) property you hold is disposed of, lost or destroyed, or you stop using
it for qualifying purposes within the meaning of Division 330 of the former
Act; and
(b) expenditure you incurred on the property forms part of the amount of
unrecouped expenditure referred to in subsection (1).
(6) The reduction is the termination value of the property worked out
under section 330-490 of the former Act.
(7) However, if that termination value is more than the asset’s
opening adjustable value (apart from subsections (5) and (6)), the excess
is included in your assessable income for the reduction year.
(1) This section applies to you if you have deducted or can deduct an
amount for transport capital expenditure in respect of a transport facility
under Subdivision 330-H of the former Act.
(2) Division 40 of the new Act applies to the expenditure as if it
were a depreciating asset you hold on this basis:
(a) it has an opening adjustable value at 1 July 2001 equal to the
total amount of transport capital expenditure under the former Act less the
amounts you have deducted or can deduct for that expenditure under the former
Act; and
(b) it has a cost equal to the total amount of transport capital
expenditure under the former Act; and
(c) in applying the formula in section 40-75 of the new Act for your
income year in which 1 July 2001 occurs—you use the adjustments in
subsection 40-75(3) of the new Act; and
(d) it has an effective life at the start of 1 July 2001 equal to the
years remaining for the expenditure under section 330-395 of the former
Act; and
(e) you must use the prime cost method.
Note: There are special rules for entities that have
substituted accounting periods: see section 40-65.
(3) Sections 40-95 and 40-110 of the new Act do not apply to the
expenditure.
(4) The asset’s opening adjustable value for an income year (the
reduction year) is reduced if, in the previous income year (but
not your income year in which 30 June 2001 occurs):
(a) property you hold is disposed of, lost or destroyed, or you stop using
it for qualifying purposes within the meaning of Division 330 of the former
Act; and
(b) expenditure you incurred on the property forms part of the amount of
transport capital expenditure referred to in subsection (1).
(5) The reduction is the termination value of the property worked out
under section 330-490 of the former Act.
(6) However, if that termination value is more than the asset’s
opening adjustable value for the reduction year (apart from subsections (4)
and (5)), the excess is included in your assessable income for the reduction
year.
(1) This section applies to you if:
(a) at the end of 30 June 2001, you hold an item of intellectual
property referred to in the table in section 373-35 of the former Act;
and
(b) you have deducted or can deduct an amount for expenditure on the asset
under Division 373 of the former Act.
(2) Subdivision 40-B of the new Act applies to the item on this
basis:
(a) it has an opening adjustable value at 1 July 2001 equal to its
unrecouped expenditure under the former Act at the end of 30 June 2001;
and
(b) its cost is its original unrecouped expenditure under the former Act;
and
(c) its effective life is the same as it had under the former Act;
and
(d) you must use the prime cost method.
Note: There are special rules for entities that have
substituted accounting periods: see section 40-65.
(1) This section applies to you if:
(a) you have deducted or can deduct an amount under Subdivision 387-G
of the former Act for an amount (the qualifying amount) of
expenditure on a forestry road or timber mill building; and
(b) you hold the road or building at the end of 30 June
2001.
(2) Subdivision 40-B of the new Act applies to the asset on this
basis:
(a) it has an opening adjustable value at 1 July 2001 equal to the
qualifying amount less any amounts you have deducted or can deduct for it under
the former Act; and
(b) in applying the formula in section 40-75 of the new Act for your
income year in which 1 July 2001 occurs—you use the adjustments in
subsection 40-75(3) of the new Act; and
(c) its cost is the qualifying amount; and
(d) it has an effective life equal to the remaining life you last
estimated for it under the former Act; and
(e) you can recalculate its effective life if you conclude that your
estimate is no longer accurate (except that the effective life cannot exceed 25
years); and
(f) you must use the prime cost method.
Note: There are special rules for entities that have
substituted accounting periods: see section 40-65.
(1) This section applies to you if you have deducted or can deduct an
amount under Subdivision 400-A of the former Act for an amount (the
qualifying amount) of expenditure on or before 30 June 2001
on evaluating the impact on the environment of a project under
Subdivision 400-A of the former Act.
(2) Division 40 of the new Act applies to the qualifying amount as if
it were a depreciating asset on this basis:
(a) it has an opening adjustable value at 1 July 2001 equal to the
qualifying amount less any amounts you have deducted or can deduct for it under
the former Act or the Income Tax Assessment Act 1936; and
(b) it has a cost equal to the qualifying amount; and
(c) it has an effective life equal to the number of years for which you
could deduct for the qualifying amount worked out under subsection 400-15(3) of
the former Act; and
(d) you must use the prime cost method.
Note: There are special rules for entities that have
substituted accounting periods: see section 40-65.
(1) Units of plant that you had allocated to a pool under
Subdivision 42-L of the former Act and that were allocated to the pool by
30 June 2001 are treated as a single depreciating asset for the purposes of
Division 40 of the new Act.
(2) Division 40 of the new Act applies to the single depreciating
asset on this basis:
(a) its cost and opening adjustable value at 1 July 2001 is the
closing balance of the pool for your income year in which 30 June 2001
occurred; and
(b) you must use the diminishing value method; and
(c) in applying the formula in section 40-70 of the new Act for your
income year in which 1 July 2001 occurs—it has a base value equal to
that opening adjustable value; and
(d) you replace the component in the formula in subsection 40-70(1) of the
new Act that includes an asset’s effective life with the pool percentage
you were using for the pool; and
(e) if an item of plant is removed from the pool because a balancing
adjustment event occurs for the item or because of subsection (3) of this
section, section 40-115 of the new Act applies so that you are treated as
having split the single depreciating asset into the removed asset and the
remaining assets in the pool; and
(f) if an amount is included in the second element of the cost of a
depreciating asset in the pool, Division 40 of the new Act applies as if
that amount had been included in the second element of the cost of the single
asset.
Note: There are special rules for entities that have
substituted accounting periods: see section 40-65.
(3) An item of plant in the pool is automatically removed from the pool if
you stop using it wholly for taxable purposes (except because a balancing
adjustment event occurs for the item).
Note 1: You work out the decline in value of an item removed
under this subsection under Subdivision 40-B of the new Act, using the cost
for it worked out under section 40-205 of the new Act.
Note 2: There are special rules for entities that have
substituted accounting periods: see section 40-65.
(1) This section sets out special rules for the application of
Division 40 of the new Act to an entity that:
(a) has a substituted accounting period; and
(b) because of a provision of this Subdivision, uses Division 40 of
the new Act to work out the decline in value of an asset, or of something that
is treated as an asset.
(2) The entity works out its deductions for its income year that includes
1 July 2001 (the calculation year) in this way:
(a) the entity works out its deductions for that asset under the former
Act as from the start of its calculation year up to the end of 30 June 2001
as if that period were an income year; and
(b) the entity works out the decline in value of the asset under
Division 40 of the new Act from 1 July 2001 until the end of its
calculation year as if that period were an income year in accordance with the
following provisions of this section.
(3) The asset’s opening adjustable value for the purposes of
Division 40 of the new Act is:
(a) for a unit of plant (including IRUs and expenditure on software that
is not pooled)—its undeducted cost at the end of 30 June 2001;
or
(b) for expenditure on eligible mining or quarrying operations, an item of
intellectual property or a spectrum licence—the amount of unrecouped
expenditure for the expenditure, item or licence under the former Act at the end
of 30 June 2001; or
(c) for transport capital expenditure—the entity’s amount of
transport capital expenditure under the former Act at the end of 30 June
2001 less any amounts the entity has deducted or can deduct for it under the
former Act up to that time; or
(d) for expenditure on a forestry road, a timber mill building, a
horticultural plant or a grapevine—the amount of that expenditure less any
amounts the entity has deducted or can deduct for it under the former Act up to
30 June 2001; or
(e) for expenditure on evaluating the impact on the environment of a
project—the amount of that expenditure less any amounts the entity has
deducted or can deduct for it under the former Act up to 30 June 2001;
or
(f) for assets that were pooled under Subdivision 42-M or 42-L of the
former Act—the closing balance of the pool at the end of 30 June
2001.
(4) The asset’s base value for applying the formula in
section 40-70 of the new Act for the diminishing value method is that
opening adjustable value.
(5) The decline in value for the assets referred to in this subsection is
worked out using the prime cost method without the adjustments in subsection
40-75(3) of the new Act, and the opening adjustable value specified in
subsection (3) of this section, in this way:
(a) for an item of plant for which you were using the prime cost
method—using the rules in section 40-10 of this Act; and
(b) for an IRU for which you were using the prime cost method—using
the rules in section 40-20 of this Act; and
(c) for a unit of software for which the entity was deducting amounts
under Subdivision 46-B of the former Act—using the rules in
subsection 40-25(2) of this Act; and
(d) for a spectrum licence—using the rules in section 40-30 of
this Act; and
(e) for an item of intellectual property—using the rules in
section 40-45 of this Act; and
(f) for an amount of expenditure on evaluating the impact on the
environment of a project—using the rules in section 40-55 of this
Act.
(6) The decline in value for the assets referred to in this subsection is
worked out using the prime cost method using the adjustments in subsection
40-75(3) of the new Act, and the opening adjustable value specified in
subsection (3) of this section, in this way:
(a) for an amount of unrecouped expenditure under Division 330 of the
former Act—using the rules in section 40-35 of this Act;
and
(b) for an amount of transport capital expenditure under Division 330
of the former Act—using the rules in section 40-40 of this Act;
and
(c) for a forestry road or timber mill building—using the rules in
section 40-50 of this Act.
(7) The entity must work out the decline in value of each of the assets
for later income years under Division 40 of the new Act.
(8) The entity must, in working out its deductions under this section for
the calculation year for:
(a) allowable capital expenditure for which the entity had deducted or can
deduct an amount under Subdivision 330-C of the former Act; or
(b) transport capital expenditure for which the entity had deducted or can
deduct an amount under Subdivision 330-H of the former Act; or
(c) a water facility for which the entity had deducted or can deduct an
amount under Subdivision 387-B of the former Act; or
(d) expenditure on connecting power to land or upgrading the connection
for which the entity had deducted or can deduct an amount under
Subdivision 387-E of the former Act; or
(e) expenditure on a telephone line on or extending to land for which the
entity had deducted or can deduct an amount under Subdivision 387-E of the
former Act;
reduce its deductions for each of the periods referred to in
paragraphs (2)(a) and (b) by multiplying the deduction for that period by
the number of days in that period and dividing the result by 365.
(9) The entity cannot deduct anything for an asset referred to in this
section under the former Act for any part of its calculation year after
30 June 2001.
(10) You are entitled to a further deduction for a depreciating asset for
which you are using the diminishing value method if the sum of the deductions
worked out under paragraphs (2)(a) and (b) (the sum amount)
is less than the deduction to which you would have been entitled for the asset
if the former Act had continued to apply to the whole of the calculation year
(the former Act amount).
(11) You increase the amount worked out under paragraph (2)(b) by the
difference between the former Act amount and the sum amount.
(1) A reference in the new Act to an amount that you have deducted or can
deduct for a depreciating asset under Division 40 of the new Act includes a
reference to an amount that you have deducted or can deduct for a capital
allowance relating to the asset under the former Act or the Income Tax
Assessment Act 1936.
(2) An amount you have deducted or can deduct for a water facility under
Subdivision 387-B of the former Act or section 75B of the Income
Tax Assessment Act 1936 is taken to have been deducted under
Subdivision 40-F of the new Act.
(3) A reference in the new Act to a reduction in your deduction for a
depreciating asset includes a reference to amounts by which your deductions for
the asset were reduced under the former Act or the Income Tax Assessment Act
1936.
(1) This section applies to you if:
(a) you incur expenditure after 30 June 2001 that forms part of the
cost of a depreciating asset that is not plant; and
(b) the depreciating asset is one that you:
(i) started to hold under a contract entered into before 1 July 2001;
or
(ii) constructed where the construction started before that day;
or
(iii) started to hold in some other way before that day; and
(c) the expenditure would have been allowable capital expenditure,
transport capital expenditure or expenditure on exploration or prospecting
within the meaning of Division 330 of the former Act if it had been
incurred before 1 July 2001.
(2) You can deduct the expenditure for the income year in which you incur
it if it would have been expenditure on exploration or prospecting within the
meaning of Division 330 of the former Act.
(3) Otherwise, Subdivision 40-B of the new Act applies to the asset
on the basis that it has a cost, and an adjustable value, of zero at the start
of 1 July 2001, and an effective life on that day worked out under
subsection (4) of this section.
(4) The effective life of the depreciating asset is the shorter of its
effective life worked out under Division 40 and:
(a) if the expenditure on the asset was incurred in carrying on eligible
mining operations other than in the course of petroleum mining—the shorter
of:
(i) 10 years; and
(ii) the number of whole years in the estimated life of the mine or
proposed mine to which the expenditure relates or, if there is more than one
such mine, of the mine that has the longest estimated life; or
(b) if the expenditure on the asset was incurred in carrying on eligible
mining operations in the course of petroleum mining—the shorter
of:
(i) 10 years; and
(ii) the number of whole years in the estimated life of the petroleum
field or proposed petroleum field to which the expenditure relates; or
(c) if the expenditure on the asset was incurred in carrying on eligible
quarrying operations—the shorter of:
(i) 20 years; or
(ii) the number of whole years in the estimated life of the quarry or
proposed quarry to which the expenditure relates or, if there is more than one
such quarry, of the quarry that has the longest estimated life.
(1) This section applies to you if:
(a) you incur expenditure after 30 June 2001 that forms part of the
cost of a depreciating asset; and
(b) the depreciating asset is one that you:
(i) started to hold under a contract entered into before 1 July 2001;
or
(ii) constructed where the construction started before that day;
or
(iii) started to hold in some other way before that day; and
(c) if you had incurred the expenditure before 1 July 2001, and had
satisfied any relevant requirement for deductibility, you would have been able
to deduct an amount for it under Division 42, 44, 373 or 380, or
Subdivision 46-B or 387-G, of the former Act.
(2) Subdivision 40-B of the new Act on the basis that it has a cost,
and an adjustable value, of zero at the start of 1 July 2001.
Table of sections
40-230 Car limit
(1) Division 40 of the new Act applies as if references in that
Division to the car limit included references to:
(a) the car depreciation limit under Division 42 of the former Act;
and
(b) the motor vehicle depreciation limit under section 57AF of the
Income Tax Assessment Act 1936.
(2) If you:
(a) have a substituted accounting period; and
(b) start to hold a car in your 2001-02 income year but before 1 July
2001;
you must use as the car limit the car depreciation limit under
section 42-80 of the former Act for the 2000-01 financial year.
Table of sections
40-285 Balancing adjustments
40-290 Reduction of deductions under former Act
etc.
40-295 Later year relief
40-340 Roll-overs
40-345 Balancing adjustments for depreciating assets that
retain CGT indexation
(1) Paragraphs 40-285(1)(a) and (2)(a) of the new Act have effect in
relation to a depreciating asset that you held at 1 July 2001 as if amounts
you have deducted or can deduct for the asset under the former Act or the
Income Tax Assessment Act 1936 were part of the asset’s decline in
value under Division 40.
(2) You are entitled to a further deduction under subsection (3)
if:
(a) you are entitled to a deduction under subsection 40-285(2) of the new
Act for a balancing adjustment event happening to a depreciating asset to which
Division 58 of the former Act applied; and
(b) you would have been entitled to a further deduction under
section 42-197 of the former Act.
(3) The amount of the further deduction is the amount worked out under
section 42-197 of the former Act.
(4) Division 40 of the new Act applies to a balancing adjustment
event that occurs on or after 1 July 2001 for a depreciating asset you hold
if you held the asset on that day.
(5) The amount included in your assessable income under subsection
40-285(1) or section 40-370 of the new Act for a balancing adjustment event
happening to a depreciating asset is reduced if:
(a) the asset is either:
(i) a depreciating asset that is not plant and that you started to hold
under a contract entered into before 1 July 2001, you constructed where the
construction started before that day or you started to hold in some other way
before that day; or
(ii) plant that you acquired at or before 11.45 am, by legal time in the
Australian Capital Territory, on 21 September 1999; and
(b) any capital gain or capital loss would be disregarded (if
Part 3-1 of the new Act applied):
(i) because of section 118-5 (about cars, motor cycles and valour
decorations); or
(ii) because of section 118-10 (about collectables); or
(iii) because of section 118-12 (about plant used to produce exempt
income); or
(iv) because the asset was a pre-CGT asset at the time of the balancing
adjustment event.
(6) The reduction is:
where:
sum of reductions is the sum of the reductions in your
deductions for the asset because you did not use it for a particular
purpose.
total decline is the decline in value of the depreciating
asset since you started to hold it.
Subsection 40-290(2) of the new Act has effect in relation to a
depreciating asset that you held at 1 July 2001 as if:
(a) any amount by which your deductions for the asset were reduced under
the former Act or the Income Tax Assessment Act 1936 because you did not
use it for a particular purpose were an amount by which your deductions for the
asset were reduced under section 40-25 of the new Act; and
(b) the total decline element of the formula in that
subsection included all amounts you have deducted or can deduct for the asset
under the former Act or the Income Tax Assessment Act 1936.
(1) You may exclude an amount that has been included in your assessable
income for plant as a result of a balancing adjustment event that occurred in
your 1999-2000 or 2000-01 income year to the extent that you choose under
section 42-290 of the former Act to treat that amount as an amount you have
deducted for the decline in value of replacement plant.
(2) You can only make this choice for the replacement plant if:
(a) you acquire it:
(i) within 2 income years after the end of the income year in which the
balancing adjustment event occurred; and
(ii) in your 2001-02 or 2002-2003 income year; and
(b) at the end of the income year in which you acquired it, you used it,
or had it installed ready for use, wholly for the purpose of producing
assessable income; and
(c) you can deduct an amount for its decline in value; and
(d) you had not made a choice under section 42-285 or 42-293 of the
former Act for the balancing adjustment event.
(3) The adjustable value of the replacement plant is reduced by the amount
covered by the choice as at the first day of the income year in which you
acquired it.
(1) This section applies to an entity (the transferee)
if:
(a) there is roll-over relief under section 40-340 of the new Act as
a result of a balancing adjustment event happening to plant; and
(b) the transferor referred to in that section was working out the decline
in value of the plant under subsection 40-10(3) of this Act.
Plant acquired before 21 September 1999
(2) The transferee works out the decline in value of the plant under
subsection 40-10(3) of this Act using the same method as the transferor
if:
(a) the transferor started to hold the plant under a contract entered into
at or before 11.45 am, by legal time in the Australian Capital Territory, on
21 September 1999; or
(b) the transferor constructed it and the construction started at or
before that time; or
(c) the transferor acquired it in some other way at or before that time;
or
(d) the transferor acquired it from an entity that was working out the
decline in value of the plant under subsection 40-10(3) of this Act and
paragraph (a), (b) or (c) of this subsection applied to that entity or to
the earliest successive transferor.
Small business taxpayers
(3) The transferee also works out the decline in value of the plant under
subsection 40-10(3) of this Act using the same method as the transferor
if:
(a) the plant was not acquired as mentioned in subsection (2);
and
(b) the transferor, or an earlier successive transferor, was using a rate
for the plant under subsection 42-160(1) or 42-165(1) of the former Act;
and
(c) the conditions set out in this table are satisfied:
|
Conditions for small business taxpayers retaining accelerated
rates |
|
|---|---|
|
Item |
Condition |
|
1 |
The transferee must have been a small business taxpayer for the income year
(the start year) that includes the time when the entity first used
the plant, or first had it installed ready for use. |
|
2 |
At that time, at least 50% of the transferee’s intended use of the
plant must be in carrying on a business for the purpose of producing assessable
income. |
|
3 |
At that time, neither of these applies: (b) the plant is being or is intended to be let predominantly on a lease of
a kind specified in subsection (5). |
(4) For the purposes of item 2 in the table in subsection (3),
an entity is treated as if it is not carrying on a business in relation to the
activities of a partnership in which the entity is a partner unless the entity
is connected with the partnership.
(5) A lease of plant referred to in item 3 of the table in
subsection (3) is an agreement (including a renewal of an agreement) under
which the holder of the plant grants a right to use the plant to another entity,
but not a hire purchase agreement or a short-term hire agreement.
(6) The transferee works out the decline in value of the plant
by:
(a) for the diminishing value method—replacing the component in the
formula in subsection 40-70(1) of the new Act that includes the plant’s
effective life with the rate the transferor, or the earliest successive
transferor, was using; or
(b) for the prime cost method:
(i) replacing the component in the formula in subsection 40-75(1) of the
new Act that includes the plant’s effective life with the rate the
transferor, or the earliest successive transferor, was using; and
(ii) increasing the plant’s cost under Division 42 of the
former Act by any amounts included in the second element of the plant’s
cost after 30 June 2001.
(1) The amount included in your assessable income under subsection
40-285(1) or 104-240(1) of the new Act as a result of a balancing adjustment
event occurring for:
(a) plant that you acquired at or before 11.45 am, by legal time in the
Australian Capital Territory, on 21 September 1999; or
(b) a depreciating asset that is not plant and that you acquired before
1 July 2001;
is reduced (but not below nil) if:
(c) for a paragraph (a) case—there would have been a reduction
under subsection 42-192(2) of the former Act as a result of that event;
or
(d) for a paragraph (b) case—there would have been a reduction
under subsection 42-192(2) of the former Act as a result of that event if the
asset were plant.
(2) The amount of the reduction is the amount worked out under subsection
42-192(2) of the former Act.
(3) There is no reduction under subsection (1) to an amount included
in your assessable income under subsection 104-240(1) if the balancing
adjustment event results in a discount capital gain under
Division 115.
(4) However, you can choose not to make a reduction under
subsection (1) and instead take advantage of the discount capital
gain.
Table of sections
40-420 Low-value pools under Division 42
continue
40-425 Allocating depreciating assets to low-value
pools
40-450 Software development pools
(1) A low-value pool you created under Subdivision 42-M of the former
Act continues under the new Act as if it had been created under
Subdivision 40-E of the new Act.
(2) For the purposes of working out the decline in value of depreciating
assets in such a pool for your income year in which 1 July 2001 occurs,
step 3 of the method statement in subsection 40-440(1) of the new Act applies to
the pool closing balance, worked out under section 42-470 of the former
Act, for the income year before that year.
You can allocate a depreciating asset to a low-value pool under
section 40-425 of the new Act if:
(a) you hold the asset at the start of 1 July 2001; and
(b) the conditions in subsection 42-455(3) of the former Act are satisfied
for the asset at the end of the previous income year.
Subsection 40-450(2) of the new Act has effect as if the reference to
expenditure being allocated to a software development pool included a reference
to expenditure being allocated to a software pool under Division 46 of the
former Act.
Table of sections
40-515 Water facilities, grapevines and horticultural
plants
40-520 Special rule for water facilities you no longer
hold
40-525 Amounts deducted for water
facilities
(1) This section applies to you if you have deducted or can deduct an
amount under Division 387 of the former Act for an amount (the
qualifying amount) of expenditure on any of these (the
primary production asset):
(a) the construction, manufacture, installation or acquisition of a water
facility; or
(b) the establishment of horticultural plants; or
(c) the establishment of grapevines;
and you would have been able to deducts amounts for the qualifying amount
for the income year in which 1 July 2001 occurs under the former Act if it
had continued to apply.
(2) Subdivision 40-F of the new Act applies to the primary production
asset on this basis:
(a) the qualifying amount is taken to be:
(i) for a water facility—the amount of capital expenditure you
incurred on the construction, manufacture, installation or acquisition of the
water facility; or
(ii) for a horticultural plant or a grapevine—the amount of capital
expenditure incurred that is attributable to the establishment of the plant or
grapevine; and
(b) for horticultural plants, you use the effective life determined under
section 387-175 of the former Act; and
(c) amounts that have been deducted or can be deducted for the qualifying
amount under the former Act or the Income Tax Assessment Act 1936 are
taken to be a decline in value under Subdivision 40-F of the new
Act.
(1) This section applies to you if:
(a) you have deducted or can deduct an amount under Division 387 of
the former Act for an amount (the qualifying amount) of
expenditure on a water facility; and
(b) you do not hold the water facility at the start of 1 July
2001.
(2) Subdivision 40-F of the new Act applies to the water facility on
the basis specified in subsection 40-515(2) of this Act, and no other taxpayer
can deduct amounts for it under the new Act.
The reference in subsection 40-555(1) of the new Act to a person having
deducted or being able to deduct an amount under Subdivision 40-F of the
new Act for expenditure on a water facility includes a reference to the person
having deducted or being able to deduct an amount for it under:
(a) Subdivision 387-B of the former Act; or
(b) section 75B of the Income Tax Assessment Act
1936.
Table of sections
40-645 Electricity supply and telephone
lines
40-650 Special rule for land that you no longer
hold
40-670 Farm consultants
(1) This section applies to you if you have deducted or can deduct an
amount under Division 387 of the former Act for an amount (the
qualifying amount) of expenditure on:
(a) connecting or upgrading the supply of mains electricity to land;
or
(b) a telephone line on land;
and you hold the land to which the electricity or telephone line relates at
the start of 1 July 2001.
(2) You deduct amounts for the qualifying amount under
Subdivision 40-G of the new Act in the same way you were writing it off
under Division 387 of the former Act.
(3) A reference in subsection 40-650(4), (5) or (7) of the new Act to an
amount being deducted under Subdivision 40-G of that Act includes a
reference to an amount being deducted under:
(a) Subdivision 387-F of the former Act; or
(b) section 70 of the Income Tax Assessment Act
1936.
(1) This section applies to you if:
(a) you have deducted or can deduct an amount under Division 387 of
the former Act for an amount (the qualifying amount) of
expenditure on connecting or upgrading the supply of mains electricity to land
or a telephone line on land; and
(b) you do not hold the land to which the electricity or telephone line
relates at the start of 1 July 2001.
(2) Subdivision 40-G of the new Act applies to the qualifying amount
on the basis specified in that Subdivision, and no other taxpayer can deduct
amounts for it under the new Act.
A person approved as a farm consultant under Subdivision 387-A of
the former Act is taken to be approved as a farm consultant under
section 40-670 of the new Act.
Table of sections
40-825 Genuine prospectors
The exemption provided by section 330-60 of the former Act continues
to apply to ordinary income derived before 20 August 2001.
Airports (Transitional)
Act 1996
1 Section 48A
Insert:
depreciating asset has the meaning given by subsection
995-1(1) of the Income Tax Assessment Act 1997.
2 Section 48A
Insert:
hold a depreciating asset has the meaning given by subsection
995-1(1) of the Income Tax Assessment Act 1997.
3 Section 48A (definition of
quasi-owner)
Before “section 42-310”, insert “the
former”.
4 After section 49A
Insert:
(1) This section applies if:
(a) a company obtains a lease relating to particular land under
section 21, 22 or 23; and
(b) at the time the lease was obtained, a depreciating asset is attached
to the land.
(2) If:
(a) just before the land vested in the Commonwealth under
Part 2:
(i) the part of the land to which the depreciating asset was attached was
held by another entity under a quasi-ownership right over land granted by an
exempt Australian government agency; and
(ii) the other entity was the holder of the asset; and
(b) on the grant of the lease referred to in paragraph (1)(a), the
other entity became a sub-lessee of the company;
then, so long as the other entity continues to hold the sub-lease of that
part of the land from the company or a successor, the other entity is taken to
hold the asset.
(3) If:
(a) subsection (2) does not apply to the depreciating asset;
and
(b) the FAC was the holder of the asset just before the land vested in the
Commonwealth under Part 2;
that Division applies to the asset as if:
(c) the company held the asset; and
(d) the amount paid by the company for the grant of the lease were an
amount paid for the acquisition of the right.
(4) However, the Minister for Finance may make a written determination of
the cost of the asset referred to in subsection (3) for the purposes of
Division 40 of the Income Tax Assessment Act 1997.
Note: If a determination is made, the cost of the asset will
be determined under item 10 of the table in subsection 40-180(2) of the
Income Tax Assessment Act 1997.
(5) The FAC must give the Minister for Finance such information as the
Minister for Finance requires about the application of Subdivision 40-D of
the Income Tax Assessment Act 1997 to the asset and to the FAC.
(6) This section does not affect the operation of section 19 of the
Civil Aviation Legislation Amendment Act 1995.
(7) In this section:
entity has the same meaning as in section 49A.
5 After section 50A
Insert:
(1) This section applies to a depreciating asset that:
(a) was transferred from the Commonwealth to a company under
section 23; and
(b) at the time of transfer, was not attached to land.
(2) The Minister for Finance may make a written determination of the cost
of the asset for the purposes of Division 40 of the Income Tax
Assessment Act 1997.
Note: If a determination is made, the cost of the plant will
be determined under item 10 of the table in subsection 40-180(2) of the
Income Tax Assessment Act 1997.
(3) The FAC must give the Minister for Finance such information as the
Minister for Finance requires about the application of Subdivision 40-D of
the Income Tax Assessment Act 1997 to the asset and to the FAC.
6 After section 51A
Insert:
(1) This section applies to a depreciating asset that was transferred from
the FAC to a company under section 30.
(2) The Minister for Finance may make a written determination of the cost
of the asset for the purposes of Division 40 of the Income Tax
Assessment Act 1997.
Note: If a determination is made, the cost of the plant will
be determined under item 10 of the table in subsection 40-180(2) of the
Income Tax Assessment Act 1997.
(3) The FAC must give the Minister for Finance such information as the
Minister for Finance requires about the application of Subdivision 40-D of
the Income Tax Assessment Act 1997 to the asset and to the FAC.
7 Subsection 52A(2) (note)
Repeal the note, substitute:
Note: If such a determination is relevant to working out a
balancing adjustment, the termination value of the plant will be determined
under item 13 or 14 of the table in former section 42-205 of the
Income Tax Assessment Act 1997, or item 11 of the table in
subsection 40-300(2) of that Act.
8 Subsection 52A(3)
Repeal the subsection, substitute:
(3) The FAC must give the Minister for Finance such information as the
Minister for Finance requires about the application of former
Subdivision 42-F of the Income Tax Assessment Act 1997, or
Subdivision 40-D of that Act, to the asset and to the FAC.
9 Paragraph 55(2)(a)
After “depreciation”, insert “or capital
allowances”.
Note: The heading to section 55 is altered by omitting
“depreciation” and substituting “capital
allowances”.
A New Tax System (Goods
and Services Tax) Act 1999
10 Subsection 38-505(2)
Omit “*car depreciation
limit”, substitute “*car
limit”.
11 Subsection 38-510(2)
Omit “*car depreciation
limit”, substitute “*car
limit”.
12 Paragraph 69-10(1)(c)
Omit “*car depreciation
limit”, substitute “*car
limit”.
13 Section 195-1 (definition of car
depreciation limit)
Repeal the definition, substitute:
car limit has the meaning given by section 40-230 of the
*ITAA 1997.
14 Section 195-1 (definition of
minerals)
Omit “section 330-25”, substitute
“section 40-730”.
A New Tax System (Luxury
Car Tax) Act 1999
15 Subsection 25-1(3)
Repeal the subsection, substitute:
(3) The luxury car tax threshold is:
(a) the car depreciation limit that applied under the former
Subdivision 42-B of the *ITAA 1997;
or
(b) the car limit that applies under section 40-230 of that
Act;
for the year in which the supply of the car occurred or the car was
*entered for home consumption.
Bounty and Capitalisation
Grants (Textile Yarns) Act 1981
16 Paragraph 3(3)(p)
Repeal the paragraph, substitute:
(p) depreciation of machinery, plant or equipment, other than:
(i) depreciation of the machinery, plant or equipment that is an allowable
deduction to the producer under the Income Tax Assessment Act 1936 or the
Income Tax Assessment Act 1997; or
(ii) depreciation of the machinery, plant or equipment for which the
producer can deduct amounts under Division 40 of the Income Tax
Assessment Act 1997;
17 Paragraph 6(5)(t)
Repeal the paragraph, substitute:
(t) depreciation of machinery, plant or equipment, other than depreciation
of machinery, plant or equipment owned by the manufacturer that is:
(i) depreciation allowed by the Commissioner of Taxation for the purposes
of a law of the Commonwealth relating to taxation; or
(ii) depreciation for which the producer can deduct amounts under
Division 40 of the Income Tax Assessment Act 1997;
Bounty (Machine Tools and
Robots) Act 1985
18 Paragraph 12(6)(p)
Repeal the paragraph, substitute:
(p) depreciation of machinery, plant or equipment other than depreciation
of machinery, plant or equipment, owned by the producer that is:
(i) depreciation allowed by the Commissioner of Taxation for the purposes
of a law of the Commonwealth relating to taxation; or
(ii) depreciation for which the producer can deduct amounts under
Division 40 of the Income Tax Assessment Act 1997;
19 After subsection
122AA(3)
Insert:
(4) In calculating the deductions (if any) allowable to the company under
Subdivision 40-B of the Income Tax Assessment Act 1997 in respect of
the asset, the adjustable value of the asset to the company at the time of the
acquisition of the asset is the amount that would have been its adjustable value
to the Commonwealth just before that time if:
(a) the Commonwealth had been a taxpayer; and
(b) the asset had been used by the Commonwealth exclusively for the
purpose of producing assessable income.
Income Tax Assessment Act
1936
20 Subsection 6(1)
Insert:
depreciating asset has the same meaning as in the Income
Tax Assessment Act 1997.
21 Subparagraph
23AH(6)(b)(i)
Before “Division 42”, insert “the
former”.
22 After subparagraph
23AH(6)(b)(i)
Insert:
(ia) a depreciating asset for which the taxpayer can, or could, apart from
this section, deduct amounts for its decline in value under Division 40 of
the Income Tax Assessment Act 1997 for any year of income; or
23 Subparagraph
23AH(7)(b)(i)
Before “Division 42”, insert “the
former”.
24 After subparagraph
23AH(7)(b)(i)
Insert:
(ia) a depreciating asset for which the partnership can, or could, apart
from this section, deduct amounts for its decline in value under
Division 40 of the Income Tax Assessment Act 1997 for any year of
income;
25 Subsection 51AAA(2)
(table)
Repeal the table, substitute:
|
Deduction provisions affected by net capital gains
limit |
||
|---|---|---|
|
Item |
Provision |
Description |
|
1 |
Subdivision A of Division 3 of Part III |
General |
|
2 |
section 8-1 |
General deductions |
|
3 |
Division 25 |
Some expenses you can deduct |
|
4 |
Division 30 |
Gifts or contributions |
|
5 |
Division 34 |
Non-compulsory uniforms |
|
6 |
Division 36 |
Tax losses of earlier income years |
|
7 |
Subdivision 40-F |
Facilities to conserve or convey water |
|
8 |
Subdivision 40-F |
Establishing grapevines |
|
9 |
Subdivision 40-G |
Landcare operations |
|
10 |
Subdivision 40-G |
Mains electricity supply |
|
11 |
Subdivision 40-G |
Telephone lines |
|
12 |
Division 165 |
Income tax consequences of changing ownership or control of a
company |
|
13 |
Subdivision 170-A |
Transfer of tax losses within |
26 At the end of subsection
51AD(1)
Add:
Note: This section applies to deductions under
Division 40 (Capital allowances) and Division 43 (Capital works) of
the Income Tax Assessment Act 1997 as if you were the owner of an asset
you hold (under that Division) instead of any other person: see
section 40-135 of that Act.
27 Subsection 51AD(3A)
Repeal the subsection.
28 Subsection 73B(1) (definition of
consideration receivable)
Omit “section 42-205”, substitute
“40-300”.
29 Subsection 73B(1) (paragraph (a) of the
definition of plant)
Repeal the paragraph, substitute:
(a) things that are plant within the meaning of section 45-40 of the
Income Tax Assessment Act 1997; or
30 Subsection 73B(1) (paragraph (b) of the
definition of plant)
Omit “section 42-18”, substitute
“section 45-40”.
31 Subsection 73B(4J)
Omit “Subdivision 42-C”, substitute
“Subdivision 40-B”.
32 Paragraphs 73B(4J)(a) and
(b)
Repeal the paragraphs, substitute:
(a) the company could deduct amounts for the decline in value of the
relevant unit under Division 40 of that Act; and
(b) any reference in Division 40 of that Act to using an asset for a
taxable purpose included a reference to the use of the relevant unit by or on
behalf of the company exclusively for carrying on research and development
activities.
33 Paragraph 73B(23)(d)
Omit “Division 42 (Depreciation)”, substitute “the
former Division 42 (Depreciation) or Subdivision 40-B (Capital
allowances)”.
34 Paragraph 73B(24)(d)
Omit “Division 42 (Depreciation)”, substitute “the
former Division 42 (Depreciation) or Subdivision 40-B (Capital
allowances)”.
35 Subsection 73B(30)
Before “Subdivision 330-A” (wherever occurring), insert
“the former”.
36 Subsection 73B(30)
After “Income Tax Assessment Act 1997” (wherever
occurring), insert “, or under section 40-730, or 40-830 (because of
subsection 40-840(1)) of that Act”.
37 Paragraph 73E(1)(c)
Omit “Division 42 (Depreciation)”, substitute “the
former Division 42 (Depreciation) or Subdivision 40-B (Capital
allowances)”.
38 Subsection 73E(3)
Repeal the subsection, substitute:
No deduction for decline in value for transferor in year of
disposal
(3) A deduction under the former Division 42 (Depreciation) or
Subdivision 40-B (Capital allowances) of the Income Tax Assessment Act
1997 is not allowable to the transferor in respect of the unit in relation
to the year of income in which the disposal took place.
39 Subsection 73E(6)
Repeal the subsection, substitute:
Modification of capital allowance provisions applicable to
transferee
(6) If a deduction is or becomes allowable to the transferee for the
decline in value of the unit, the provisions of Division 40 (Capital
allowances) of the Income Tax Assessment Act 1997 apply as if:
(a) the transferee had acquired the unit for a cost equal to the modified
written-down value of the unit; and
(b) subsections 73B(21) and (22) had effect as if a reference in those
subsections to the written-down value of the unit were a reference to the
modified written-down value of the unit; and
(c) in relation to the year of income of the transferee in which the
disposal took place, the component “days held” in the formula in
section 40-70 or 40-75 of the Income Tax Assessment Act 1997
included the number of days in that year when the transferor both:
(i) held the unit within the meaning of Division 40 of the Income
Tax Assessment Act 1997; and
(ii) used it for a taxable purpose within the meaning of that Division or
had it installed ready for use for that purpose.
40 Subsection 73F(10)
Before “Subdivision 330-A” (wherever occurring), insert
“the former”.
41 Subsection 73F(10)
After “Income Tax Assessment Act 1997” (wherever
occurring), insert “, or under section 40-730, or 40-830 (because of
subsection 40-840(1)) of that Act”.
42 Subsection 73G(1)
Omit “section 373-15”, substitute “subsection
995-1(1)”.
43 Paragraphs 82AE(aa) and
(a)
Repeal the paragraphs, substitute:
(aa) structural improvements that, apart from section 45-40 of the
Income Tax Assessment Act 1997, are plant within the meaning of that Act;
or
(a) plumbing fixtures and fittings to which subsection (2) of the
definition of plant in section 45-40 of the Income Tax
Assessment Act 1997 applies; or
44 Subsection 82AM(1)
Omit “or 330-590”.
45 Subsection 82AM(2)
Before “section 330-15”, insert “the
former”.
46 Subsection 82AM(2)
After “387-E”, insert “or paragraph 40-515(1)(a),
section 40-630, section 40-645 or
section 40-730”.
47 Paragraphs 82AM(3)(a) and
(b)
Repeal the paragraphs, substitute:
(a) the property is a depreciating asset; and
(b) a deduction is allowable for it under Division 40 of the
Income Tax Assessment Act 1997; and
(c) the taxpayer could have deducted the property’s cost under that
Act for the income year in which the taxpayer first used it for a taxable
purpose (within the meaning of that Act).
48 Subsection 82AQ(1) (definition of eligible
property)
Omit “42-18”, substitute “45-40”.
49 Paragraph 82AQ(3A)(b)
Repeal the paragraph, substitute:
(b) the taxpayer is the holder of the property for the purposes of
Division 40 of the Income Tax Assessment Act 1997;
50 Subsection 82AQ(3AA)
Repeal the subsection.
51 Subsection 82AQ(3B)
Omit “, quasi-owner”.
52 Subsection 82BC(3)
Omit “an amount of depreciation”, substitute “the decline
in value of a depreciating asset”.
53 Subsection 82CB(1) (paragraph (e) of the
definition of RHQ setup costs)
Omit “plant”, substitute “depreciating
assets”.
54 Subsection 82KH(1) (paragraphs (ka),
(oa) and (wa) of the definition of relevant
expenditure)
Omit “by section 373-15”, substitute
“in”.
55 Subsection 82KH(1) (paragraph (x) of the
definition of relevant expenditure)
Omit “it is taken into account in working out under Division 373
of the Income Tax Assessment Act 1997 the taxpayer’s unrecouped
expenditure on the item”, substitute “it is taken into account in
working out under Division 40 of the Income Tax Assessment Act 1997
the adjustable value of the item to the taxpayer”.
56 Subsection 82KH(1) (paragraph (y) of the
definition of relevant expenditure)
Repeal the paragraph, substitute:
(y) it would be so taken into account apart from item 8 in the table
in subsection 40-180(2), or item 1 in the table in subsection 40-190(3)
(both about non-arm’s length transactions).
57 Paragraph 82KH(1AD)(b)
Repeal the paragraph, substitute:
(b) if paragraph (ka), (oa) or (wa) of the definition of
relevant expenditure in subsection (1) covers the
expenditure—the taxpayer deducting or being able to deduct, or not
deducting or not being able to deduct, as appropriate, an amount under
Division 40 of the Income Tax Assessment Act 1997 for an item of
intellectual property for a year of income because the taxpayer’s
adjustable value of the item would be calculated under that Division by
reference to the relevant expenditure; and
58 Subsection 83(2)
Omit “42-205”, substitute “40-300”.
59 Section 102AAB (definition of
depreciation provision)
Repeal the definition, substitute:
depreciation provision means:
(a) any of sections 54 to 62 of Division 3 of Part III of
this Act, any provision of Divisions 10, 10AAA, 10AA, 10A, 10C and 10D of
that Part; or
(b) any provision of:
(i) Division 40 of the Income Tax Assessment Act 1997 (other
than Subdivision 40-E); or
(ii) the former Division 42 of that Act (other than
Subdivisions 42-L and 42-M); or
(iii) the former Subdivision 330-A, 330-C, 330-H or 387-G of that
Act; or
(c) any provision of Division 43 of the Income Tax Assessment Act
1997.
60 Subsection 102AAZ(3)
Before “Division 42”, insert “the
former”.
61 At the end of
section 102AAZ
Add:
(4) For the purpose of exercising the Commissioner’s power under
subsection (2) in relation to deductions allowable under Division 40
of the Income Tax Assessment Act 1997, the Commissioner must assume that
the property was used by the trustee of the trust estate during any
non-attributable year of income wholly and exclusively for a taxable purpose
(within the meaning of that Division).
62 Subsection 124L(1A)
(note)
Omit “Division 373”, substitute
“Division 40”.
63 Subsection 159GE(1) (definition of capital
expenditure deduction)
Repeal the definition, substitute:
capital expenditure deduction means a deduction:
(a) under Division 10, 10AAA, 10AA, 10A, 10C or 10D of this Part;
or
(b) under Subdivision 40-B of the Income Tax Assessment Act
1997 for a depreciating asset that is a forestry road or timber mill
building; or
(c) under Division 43 of that Act; or
(d) under section 40-830 of that Act for an amount that is a project
amount under subsection 40-840(1) (about mining capital expenditure and
transport capital expenditure); or
(e) under the former Subdivision 330-C, 330-H or 387-G of that
Act.
64 Subsection 159GE(1) (definition of
depreciation deduction)
Repeal the definition, substitute:
depreciation deduction means a deduction:
(a) in respect of depreciation under Division 3 of this Act or the
former Division 42 of the Income Tax Assessment Act 1997;
or
(b) for the decline in value of a depreciating asset under
Division 40 of the Income Tax Assessment Act 1997.
65 Subsection 159GE(1) (definition of
Division 10, 10AA or 10A property)
Repeal the definition, substitute:
Division 10, 10AA or 10A property means property in
relation to which there has been incurred:
(a) allowable capital expenditure within the meaning of Division 10
or 10AA of this Part or the former Subdivision 330-C of the Income Tax
Assessment Act 1997 or mining capital expenditure within the meaning of
section 40-860 of that Act;
(b) expenditure taken into account in ascertaining an amount of residual
capital expenditure specified in paragraph 122C(1)(a); or
(c) capital expenditure specified in subsection 124F(1) or 124JA(1) of
this Act or the former section 387-460 of the Income Tax Assessment Act
1997; or
(d) capital expenditure on a forestry road in connection with a timber
operation, or capital expenditure for the construction or acquisition of a
timber mill building.
66 Subsection 159GE(1) (definition of
Division 10AAA property)
Before “Subdivision 330-H”, insert “the
former”.
67 Subsection 159GE(1) (definition of
Division 10AAA property)
After “Subdivision 330-H”, insert “, or
section 40-865”.
68 Subsection 159GE(1) (paragraph (a) of
the definition of eligible amount)
Repeal the paragraph, substitute:
(a) where the item is an item of eligible depreciation property:
(i) the amount that was the cost of the item of property to the taxpayer
who owns the item for the purposes of subsection 62(1) of this Act; or
(ii) the amount that was the cost of the item of property within the
meaning of Division 40, or the former Division 42, of the Income
Tax Assessment Act 1997 to the taxpayer who holds it;
or that would have been the cost of the item of property to the taxpayer
for the purposes of that subsection or that Division if that subsection or that
Division had applied in relation to the item of property, as the case requires;
and
69 Subsection 159GE(1) (definition of
eligible depreciation property)
Repeal the definition, substitute:
eligible depreciation property means:
(a) plant or articles within the meaning of section 54 of this Act;
or
(b) plant within the meaning of the former section 42-18 of the
Income Tax Assessment Act 1997 or plant within the meaning of
section 45-40 of that Act; or
(c) a depreciating asset within the meaning of Division 40 of that
Act.
70 Subsection 159GE(1) (definition of
eligible spectrum licence)
Repeal the definition, substitute:
eligible spectrum licence means a spectrum licence within the
meaning of the Income Tax Assessment Act 1997.
71 At the end of subsection
159GE(1)
Add:
Note: This Division applies to deductions under
Division 40 (Capital allowances) and Division 43 (Capital works) of
the Income Tax Assessment Act 1997 as if you were the owner of an asset
you hold (under that Division) instead of any other person: see
section 40-135 of that Act.
72 Subsection 159GE(9)
Repeal the subsection.
73 Subsection 159GF(1)
Repeal the subsection, substitute:
(1) Subject to subsection 159GJ(1), in this Division a reference to the
residual amount at a particular time (in this subsection referred to as the
relevant time) in relation to the eligible amount by reason of
which an item of property is eligible depreciation property at the relevant time
is a reference to the eligible amount reduced by:
(a) where the item of property was not dealt with by the taxpayer who
holds the item in the prescribed manner at any time during the period (in this
subsection referred to as the relevant period) before the relevant
time when it was held by the taxpayer (within the meaning of Division 40 of
the Income Tax Assessment Act 1997)—the total amount of deductions
for depreciation or decline in value that would, but for any deduction denying
provision, have been allowable to the taxpayer under this Act or the Income
Tax Assessment Act 1997 in respect of that item of property for the relevant
period if:
(i) at all times during the relevant period the taxpayer had wholly and
exclusively dealt with the item of property in the prescribed manner;
and
(ii) those deductions were calculated using the diminishing value method;
and
(iii) section 57AG, as in force immediately before the commencement
of section 1 of the Taxation Laws Amendment Act 1992, did not apply
in relation to the item of property;
(b) where the item of property was wholly and exclusively dealt with by
the taxpayer who held the item in the prescribed manner at all times during the
relevant period—the total amount of deductions for depreciation or decline
in value that were or, but for any deduction denying provision, would have been,
allowed or allowable to the taxpayer in respect of the item of property for that
period under this Act or the Income Tax Assessment Act 1997;
and
(c) in any other case—the total amount of deductions for
depreciation or decline in value that, but for any deduction denying provision,
would have been allowable to the taxpayer who holds the item of property in
respect of the item under this Act or the Income Tax Assessment Act 1997
for the relevant period if:
(i) the taxpayer had wholly and exclusively dealt with the item of
property in the prescribed manner at all times during the relevant period;
and
(ii) in respect of any part of the relevant period for which deductions
for depreciation or decline in value were or, but for any deduction denying
provision, would have been allowed or allowable under this Act or the Income
Tax Assessment Act 1997—the deductions were allowable on the same
basis and at the same percentage as was or would have been allowed or allowable
for that part of the relevant period; and
(iii) in respect of any other part (in this subparagraph referred to as
the relevant part) of the relevant period—the deductions
were allowable:
(A) where the relevant part was immediately succeeded by another part of
the relevant period in respect of which deductions for depreciation or decline
in value were or, but for any deduction denying provision, would have been
allowed or allowable under this Act or the Income Tax Assessment Act
1997—on the same basis and at the same percentage as was or would have
been allowed or allowable in respect of that other part; and
(B) in any other case—on the same basis and at the same percentage
as was or, but for any deduction denying provision, would have been allowed or
allowable under this Act or the Income Tax Assessment Act 1997 in respect
of the part of the relevant period for which deductions for depreciation or
decline in value was or would have been allowed or allowable, being the part
that immediately preceded the relevant part.
74 Paragraph 159GF(3)(f)
Before “Subdivision 330-C”, insert “the
former”.
75 After paragraph
159GF(3)(f)
Insert:
(fa) so much of an amount of mining capital expenditure or transport
capital expenditure (within the meaning of the Income Tax Assessment Act
1997) as has not been deducted under Division 40 of that Act;
76 Paragraph 159GF(3)(g)
Before “subsection 387-470(1)”, insert “the
former”.
77 After paragraph
159GF(3)(g)
Insert:
(h) the difference between the cost of a forestry road or timber mill
building for the purposes of Division 40 of the Income Tax Assessment
Act 1997 and its adjustable value for the purposes of that
Division;
78 Subsection 159GF(4)
Before “Subdivision 330-H”, insert “the
former”.
79 Subsection 159GF(4)
After “1997”, insert “, or under Subdivision 40-I of
that Act for transport capital expenditure,”.
80 Subsection 159GF(6)
Repeal the subsection, substitute:
(6) In this Division, a reference to the residual amount at a particular
time in relation to an amount of expenditure because of which an item of
property is an eligible spectrum licence is a reference to:
(a) the amount of unrecouped expenditure (within the meaning of the former
section 380-20 of the Income Tax Assessment Act 1997) on that
licence at that time; or
(b) the adjustable value of that licence (within the meaning of
Division 40 of that Act) at that time.
81 Subparagraph
159GJ(1)(c)(iii)
Repeal the subparagraph, substitute:
(iii) in relation to any part (in this subsection referred to as the
post-application part) of the year of income that occurs after the
application period (not being a part that occurs after the commencement of a
subsequent application period):
(A) the residual amount in relation to the item of eligible depreciation
property at any time (in this sub-subparagraph referred to as the relevant
time) during the post-application part is an amount ascertained in
accordance with the formula:
where:
A is the amount that, but for this application of this
section, would be the residual amount at the relevant time in relation to the
eligible amount (in this subparagraph referred to as the relevant eligible
amount) by reason of which the item is an item of eligible depreciation
property.
B is:
(a) where paragraph (b) of this component does not apply—the
amount that, in determining the residual amount in component A, would be taken
into account as depreciation under subsection 159GF(1) in respect of the
application period; and
(b) where, in determining the residual amount in component A, depreciation
deductions taken into account in respect of the post-application part would be
calculated under this Act or the Income Tax Assessment Act 1997 using the
diminishing value method—the amount that, in determining the residual
amount in component A, would be taken into account under subsection 159GF(1) as
depreciation deductions in respect of the application period and the part of the
post-application part before the relevant time; and
C is:
(a) where paragraph (a) of component B applies—an amount equal
to the total notional principal in relation to the relevant eligible amount in
relation to the application period; and
(b) where paragraph (b) of component B applies—the sum
of:
(i) the total notional principal in relation to the relevant eligible
amount in relation to the application period; and
(ii) the amount that, in determining the residual amount in component A,
would be taken into account as depreciation deductions under subsection 159GF(1)
in respect of the part of the post-application part before the relevant time if
the depreciated value under this Act, the undeducted cost under the former
Division 42 of the Income Tax Assessment Act 1997 or the adjustable
value under Division 40 of that Act, of the item of eligible depreciation
property at the beginning of the year of income in which this Division ceases to
apply were equal to the residual amount at the beginning of the application
period as reduced by the total notional principal in relation to the relevant
eligible amount in relation to the application period;
(B) for the purposes of any application of this Act or the Income Tax
Assessment Act 1997, in relation to the item of property in relation to the
post-application part—the depreciated value, within the meaning of
Division 3 of this Part, the undeducted cost under the former
Division 42 of the Income Tax Assessment Act 1997 or the adjustable
value under Division 40 of that Act, of the item of property at any time
during the post-application part shall be taken to be an amount equal to the
residual amount in relation to the relevant eligible amount at that time as
ascertained in accordance with sub-subparagraph (A); and
(C) the depreciation deduction (if any) allowable to a taxpayer in
relation to the item of property in relation to the post-application part is the
depreciation deduction that would be allowable in respect of that period if this
Division did not apply and, in the case of an item of property in relation to
which paragraph 56(1)(a) of this Act or the diminishing value method under the
former Division 42, or Division 40, of the Income Tax Assessment
Act 1997 would, apart from this Division, apply, if the depreciated value,
within the meaning of Division 3 of this Part, the undeducted cost, under
the former Division 42 of the Income Tax Assessment Act 1997 or the
adjustable value under Division 40 of that Act, of the item of property at
the beginning of the year of income were equal to the residual amount, as
ascertained under sub-subparagraph (A), in relation to the relevant
eligible amount at the commencement of the post-application part;
82 Paragraph 159GJ(1)(e)
Omit “Division 3 of this Part and Division 42 of”,
substitute “this Act and”.
83 Paragraph 159GJ(2)(a)
Repeal the paragraph, substitute:
(a) no deduction is allowable to any taxpayer under:
(i) Division 10, 10AA or 10A of this Part; or
(ii) section 40-830 of the Income Tax Assessment Act 1997 for
a project amount that is mining capital expenditure within the meaning of that
Act; or
(iii) Subdivision 40-B of that Act for a depreciating asset that is a
forestry road or timber mill building; or
(iv) the former Subdivision 330-C or 387-G of that Act;
in relation to any amount of expenditure (not being expenditure incurred
after the application period) by reason of which the item is Division 10,
10AA or 10A property for any year of income in which the whole or a part of the
application period occurs;
84 Paragraph 159GJ(2)(c)
Repeal the paragraph, substitute:
(c) for the purposes of the application of:
(i) Division 10, 10AA or 10A of this Part; or
(ii) section 40-830 of the Income Tax Assessment Act 1997 for
a project amount that is mining capital expenditure within the meaning of that
Act; or
(iii) Subdivision 40-B of that Act for a depreciating asset that is a
forestry road or timber mill building; or
(iv) the former Subdivision 330-C or 387-G of that Act;
in relation to an amount of expenditure (not being expenditure incurred
after the application period) by reason of which the item is Division 10,
10AA or 10A property at any time after the application period, there shall be
taken to have been allowed in respect of the amount of expenditure a deduction
under whichever of those provisions applies in respect of the amount of
expenditure of an amount equal to the total notional principal in relation to
the amount of expenditure in relation to the application period.
85 Paragraph 159GJ(3)(a)
Repeal the paragraph, substitute:
(a) no deduction is allowable to any taxpayer under:
(i) Division 10AAA of this Part; or
(ii) section 40-830 of the Income Tax Assessment Act 1997 for
a project amount that is transport capital expenditure within the meaning of
that Act; or
(iii) the former Subdivision 330-H of that Act;
in relation to any amount of expenditure (not being expenditure incurred
after the application period) by reason of which the item is Division 10AAA
property for any year of income in which the whole or a part of the application
period occurs;
86 Paragraph 159GJ(3)(c)
Repeal the paragraph, substitute:
(c) for the purposes of the application of:
(i) Division 10AAA of this Part; or
(ii) section 40-830 of the Income Tax Assessment Act 1997 for
a project amount that is transport capital expenditure within the meaning of
that Act; or
(iii) the former Subdivision 330-H of that Act;
in relation to an amount of expenditure (not being expenditure incurred
after the application period) by reason of which the item is Division 10AAA
property for any year of income after the year of income in which this Division
ceases to apply—it shall be taken to be a requirement of those provisions
that the deduction allowable under any of those provisions in respect of the
amount of expenditure does not exceed the residual amount in relation to the
amount of expenditure as ascertained in accordance with
paragraph (b).
87 Paragraph 159GJ(5)(a)
Omit “Division 380”, substitute “the former
Division 380, or Division 40,”.
88 Paragraph 159GJ(5)(c)
Omit “Division 380”, substitute “the former
Division 380, or Division 40,”.
89 Paragraph 159GM(b)
Repeal the paragraph, substitute:
(b) the expenditure by reason of which the item of property is eligible
capital expenditure property is the amount that was the cost of the item of
property to the taxpayer who incurred the expenditure for the purpose
of:
(i) subsection 62(1) of this Act; or
(ii) the former Subdivision 42-B, or Subdivision 40-C, of the
Income Tax Assessment Act 1997;
or that would have been the cost to the taxpayer for the purpose of that
subsection or that Subdivision if that subsection or that Subdivision applied in
relation to the item of property;
90 Section 159UC
Omit “section 42-18”, substitute
“section 45-40”.
91 Paragraph 160APHJ(7)(c)
Before “subsection”, insert “the former”.
92 Subsection 170(10AA) (table
item 20)
Omit “Section 42-290”, substitute “The former
section 42-290”.
93 Subsection 170(10AA) (table
item 180)
Omit “Section 330-175”, substitute “The former
section 330-175”.
94 Subsection 170(10AA) (table
item 180)
Omit “Section 330-245”, substitute “The former
section 330-245”.
95 Subsection 262A(4AB)
Before “section 42-355”, insert “the
former”.
96 Subsection 262A(4ACA)
(note)
Repeal the note.
97 Section 317 (definition of
depreciation provision)
Repeal the definition, substitute:
depreciation provision means:
(a) any of sections 54 to 62 of Division 3 of Part III of
this Act, any provision of Divisions 10, 10AAA, 10AA, 10A, 10C and 10D of
that Part; or
(b) any provision of Division 40 of the Income Tax Assessment Act
1997 (other than Subdivision 40-E) or of Division 43 of that Act;
or
(c) any provision of the former Division 42 of that Act (other than
Subdivisions 42-L and 42-M), or the former Subdivisions 330-A, 330-C,
330-H and 387-G of that Act.
98 Subsection 398(3)
Repeal the subsection, substitute:
(3) For the purpose of exercising his or her power under
subsection (2) to determine a notional allowable deduction in relation
to:
(a) sections 54 to 62 of this Act; or
(b) the former Division 42 (Depreciation) of the Income Tax
Assessment Act 1997 (other than Subdivisions 42-L and 42-M);
or
(c) Division 40 of that Act (other than
Subdivision 40-E);
the Commissioner must assume that the property was used by the eligible CFC
during any non-attributable income period wholly and exclusively for the purpose
of producing notional assessable income.
99 Subsubparagraph
439(1)(a)(iii)(A)
Repeal the subsubparagraph, substitute:
(A) if the company were a resident within the meaning of section 6,
depreciation would be allowable to the company under section 54 of this Act
or the former Division 42 of the Income Tax Assessment Act 1997, or
the company could deduct an amount for the decline in value of a depreciating
asset under Division 40 of that Act, in respect of any year of
income; and
100 Subparagraph
570(1)(a)(i)
Repeal the subparagraph, substitute:
(i) plant or articles within the meaning of section 54 of this Act,
plant within the meaning of section 45-40 of the Income Tax Assessment
Act 1997 or a depreciating asset within the meaning of Division 40 of
that Act; or
101 Subparagraph
570(1)(a)(ii)
Omit “section 373-15 of”.
102 Paragraph 570(1)(b)
After “articles”, insert “, depreciating
asset”.
103 Subparagraph
574(1)(a)(i)
After “articles”, insert “, depreciating
asset”.
104 Subsection 245-140(1) of Schedule 2C
(table of deductible expenditure)
Repeal the table, substitute:
|
Table of deductible expenditure |
||
|---|---|---|
|
|
Column 1 |
Column 2 |
|
Item |
General description of expenditure |
Provision under which a deduction is allowable in respect of the
expenditure |
|
1 |
Cost of plant or articles used (or installed ready for use) to produce
assessable income |
Subsections 54(1), 56(1), 57AK(4) and 57AM(5), (7), (9), (10) and (11) of
this Act or the former Division 42 of the Income Tax Assessment Act
1997 |
|
2 |
Expenditure deductible under Division 40 (capital allowances) of the
Income Tax Assessment Act 1997 |
Division 40 of that Act |
|
3 |
Expenditure on software, pooled |
The former Subdivision 46-D of the Income Tax Assessment Act
1997 |
|
4 |
Expenditure incurred in borrowing money to produce assessable
income |
Section 25-25 of the Income Tax Assessment Act 1997 |
|
5 |
Expenditure on a telephone line on land on which a business of primary
production is carried on |
The former Subdivision 387-F of the Income Tax Assessment Act
1997 |
|
6 |
Expenditure in connecting or upgrading mains electricity facilities on land
used or intended for use in producing assessable income |
The former Subdivision 387-E of the Income Tax Assessment Act
1997 |
|
7 |
Expenditure on scientific research |
Subsection 73A(2) |
|
8 |
Expenditure on research and development activities |
Section 73B |
|
9 |
Expenditure in connection with clearing and preparing land for primary
production |
Subsection 75A(3) |
|
10 |
Expenditure on establishing a grape vine |
The former Subdivision 387-D of the Income Tax Assessment Act
1997 |
|
11 |
Expenditure on plant or structural improvements for conserving or conveying
water |
The former Subdivision 387-B of the Income Tax Assessment Act
1997 |
|
12 |
Expenditure on certain kinds of plant and equipment for use in very large
development projects |
Subsections 82AB(1) and 82AT(1) |
|
13 |
Expenditure on environmental impact assessment |
item 1, 2 or 3 of the table in the former subsection 400-15(3) of the
Income Tax Assessment Act 1997 |
|
14 |
Advance revenue expenditure |
Subdivision H of Division 3 of Part III |
|
15 |
Expenditure incurred in relation to mining or quarrying
operations |
The former Subdivision 330-C of the Income Tax Assessment Act
1997 |
|
16 |
Expenditure incurred on exploration or prospecting for minerals or quarry
materials |
The former Subdivision 330-A of the Income Tax Assessment Act
1997 |
|
17 |
Expenditure incurred in transporting minerals or quarry materials |
The former Subdivision 330-H of the Income Tax Assessment Act
1997 |
|
18 |
Expenditure on forestry roads to an area of timber operations |
The former Subdivision 387-G of the Income Tax Assessment Act
1997 |
|
19 |
Expenditure on timber buildings used for timber milling business, if the
buildings are in a forest or adjacent to a timber milling or timber felling
area |
The former Subdivision 387-G of the Income Tax Assessment Act
1997 |
|
20 |
Expenditure on acquiring a unit of industrial property to produce
assessable income |
Subsection 124M(1) |
|
21 |
Expenditure on acquiring an item of intellectual property to produce
assessable income |
The former Subdivision 373-B of the Income Tax Assessment Act
1997 |
|
22 |
Expenditure on Australian films |
Section 124ZAF |
|
23 |
Expenditure on assessable income producing buildings and other capital
works |
Section 43-10 of the Income Tax Assessment Act 1997 |
|
24 |
Expenditure incurred in establishing horticultural plants |
The former Subdivision 387-C |
|
25 |
Expenditure incurred in obtaining a spectrum licence to produce assessable
income |
The former Division 380 of the Income Tax Assessment Act
1997 |
105 Subparagraph 245-155(1)(b)(iv) of
Schedule 2C
Omit “Division 42”, substitute “the former
Division 42, or Division 40,”.
106 Section 57-10 of
Schedule 2D
Omit “Division 330”, substitute
“Division 40”.
107 After paragraph 57-25(4)(g) of
Schedule 2D
Insert:
(ga) Division 40 of the Income Tax Assessment Act 1997 (about
capital allowances); and
108 Paragraph 57-25(4)(h) of
Schedule 2D
Before “Division 42”, insert “the
former”.
109 Paragraph 57-25(4)(k) of
Schedule 2D
Before “Division 330”, insert “the
former”.
110 Paragraph 57-25(4)(l) of
Schedule 2D
Before “Subdivision 387-G”, insert “the
former”.
111 Subsection 57-85(3) of Schedule 2D
(table item 2)
Omit “Subdivision 387-E”, substitute “the former
Subdivision 387-E or Subdivision 40-G”.
112 Subsection 57-85(3) of Schedule 2D
(table item 3)
Omit “Subdivision 400-A”, substitute “the former
Subdivision 400-A or Subdivision 40-I”.
113 Subsection 57-85(3) of Schedule 2D
(table item 4)
Omit “Subdivision 400-B”, substitute “the former
Subdivision 400-B or Subdivision 40-H”.
114 Subsection 57-85(3) of Schedule 2D
(table item 6)
Omit “Subdivision 387-D”, substitute “the former
Subdivision 387-D or Subdivision 40-F”.
115 Subsection 57-85(3) of Schedule 2D
(table item 7A)
Omit “Subdivision 373-B”, substitute “the former
Subdivision 373-B or Subdivision 40-B”.
116 Subsection 57-85(3) of Schedule 2D
(table item 8)
Omit “Subdivision 387-A”, substitute “the former
Subdivision 387-A or Subdivision 40-G”.
117 Subsection 57-85(3) of Schedule 2D
(table item 10)
Omit “Subdivision 330-C”, substitute “the former
Subdivision 330-C or Subdivision 40-I”.
118 Subsection 57-85(3) of Schedule 2D
(table item 11)
Omit “Subdivision 330-H”, substitute “the former
Subdivision 330-H or Subdivision 40-I”.
119 Subsection 57-85(3) of Schedule 2D
(table item 12)
Omit “Subdivision 330-I”, substitute “the former
Subdivision 330-I or Subdivision 40-H”.
120 Subsection 57-85(3) of Schedule 2D
(table item 14A)
Omit “Subdivisions 46-B and 46-D”, substitute “the
former Subdivisions 46-B and 46-D or Subdivisions 40-B and 40-E and
section 40-335.
121 Subsection 57-85(3) of Schedule 2D
(table item 14B)
Omit “Subdivision 380-A”, substitute “the former
Subdivision 380-A or Subdivision 40-B”.
122 Subsection 57-85(3) of Schedule 2D
(table item 15)
Omit “Subdivision 387-F”, substitute “the former
Subdivision 387-F or Subdivision 40-G”.
123 Subsection 57-85(3) of Schedule 2D
(table item 16)
Omit “Subdivision 387-G”, substitute “the former
Subdivision 387-G or Subdivision 40-B”.
124 Subsection 57-85(3) of Schedule 2D
(table item 17)
Omit “Subdivision 387-G”, substitute “the former
Subdivision 387-G or Subdivision 40-B”.
125 Subsection 57-85(3) of Schedule 2D
(table item 19)
Omit “Subdivision 387-B”, substitute “the former
Subdivision 387-B or Subdivision 40-F”.
126 Subsection 57-105(1) of
Schedule 2D
Before “Subdivision 330-A”, insert “the
former”.
127 Subsection 57-105(1) of
Schedule 2D
After “330-C”, insert “or
Division 40”.
128 Subsection 57-105(2) of
Schedule 2D
Before “Subdivision 330-A”, insert “the
former”.
129 Subsection 57-110(2) of Schedule 2D
(table item 2)
Before “Division 42”, insert “The
former”.
130 Subsection 57-110(2) of Schedule 2D
(after table item 2)
Insert:
|
2A |
Capital allowances |
Section 40-285 |
Division 40 |
131 Subsection 57-110(2) of Schedule 2D
(table item 4)
Omit “Section 387-315”, substitute “The former
section 387-315”.
132 Subsection 57-110(2) of Schedule 2D
(table item 4)
Before “Subdivision 387-D”, insert “The
former”.
133 Subsection 57-110(2) of Schedule 2D
(table item 5A)
Before “Subdivisions 373-C”, insert “The
former”.
134 Subsection 57-110(2) of Schedule 2D
(table item 5A)
Before “Subdivision 373-B”, insert “The
former”.
135 Subsection 57-110(2) of Schedule 2D
(table item 6)
Before “Subdivision 330-J”, insert “The
former”.
136 Subsection 57-110(2) of Schedule 2D
(table item 6)
After “Whichever of the following”, insert “former
Subdivisions”.
137 Subsection 57-110(2) of Schedule 2D
(table item 8A)
Before “Subdivisions 380-B”, insert “The
former”.
138 Subsection 57-110(2) of Schedule 2D
(table item 8A)
Before “Subdivision 380-A”, insert “The
former”.
139 Subsection 57-110(2) of Schedule 2D
(table item 9)
Omit “Section 387-485”, substitute “The former
section 387-485”.
140 Subsection 57-110(2) of Schedule 2D
(table item 9)
Before “Subdivision 387-G”, insert “The
former”.
141 Subdivision 57-N of
Schedule 2D
Repeal the Subdivision, substitute:
Subdivision 57-I, and Subdivision 57-K in so far as it applies
to balancing adjustments for plant or depreciating assets, do not apply in
respect of an asset to which Subdivision 58-B of the Income Tax
Assessment Act 1997 applies.
142 Subparagraph 42A-90(4)(a)(ii) of
Schedule 2E
Repeal the subparagraph, substitute:
(ii) any amount that is included in the lessee’s assessable income
under subsection 59(2) or under Subdivision 40-D, or the former
Subdivision 42F or 42G, of the Income Tax Assessment Act 1997
because the lessee is taken to have disposed of the car; or
143 Subsection 42A-105(4) of
Schedule 2E
Repeal the subsection, substitute:
(4) If the car is afterwards acquired by an associate of the lessee, the
cost of the car for the purpose of calculating its adjustable value, within the
meaning of Division 40 of the Income Tax Assessment Act 1997, at the
time of the acquisition for the purposes of the application of this Act to the
associate is taken to be whichever is the lesser of:
(a) the sum of:
(i) the amount that would have been the adjustable value of the car
(within the meaning of the Income Tax Assessment Act 1997) at that time
for the purposes of the application of this Act to the lessee if the lessee were
not taken under this Division to have disposed of the car; and
(ii) any amount that is included in the lessee’s assessable income
under subsection 59(2), under the former Subdivision 42F or 42G of the
Income Tax Assessment Act 1997 or under Subdivision 40-D of that Act
because the lessee is taken under this Division to have disposed of the car;
or
(b) the cost of the acquisition of the car by the associate.
144 Section 42A-120 of
Schedule 2E
Omit “depreciation allowable to that person for the car, would have
been reduced because of the operation of section 57AF or section 42-80
of the Income Tax Assessment Act 1997”, substitute
“deductions allowable to that person for the decline in value of the car,
would have been reduced because of the operation of section 57AF, the
former section 42-80 of the Income Tax Assessment Act 1997 or
section 40-230 of that Act”.
145 After paragraph 268-35(2)(a) of
Schedule 2F
Insert:
(aa) deductions for the decline in value of a depreciating
asset;
See Division 40 of the Income Tax
Assessment Act 1997.
146 Paragraph 268-35(2)(b) of Schedule 2F
(note)
Before “Division 330”, insert “the
former”.
147 Paragraph 268-35(2)(c) of Schedule 2F
(note)
Before “Division 330”, insert “the
former”.
148 Paragraph 268-40(3)(c) of Schedule 2F
(note)
Omit “item 1.16”, substitute
“item 1.25”.
Income Tax Assessment Act
1997
149 Section 10-5 (table item headed
“balancing adjustment”)
Repeal the item, substitute:
|
balancing adjustment |
|
|
|
see capital allowances, industrial property,
investments, research & development, scientific research
and tax exempt entities |
|
|
150 Section 10-5 (after the table item
headed “bounties”)
Insert:
|
capital allowances |
|
|
|
excess of termination value over adjustable value |
|
|
|
generally |
40-285 |
|
|
for some cars |
40-370 |
|
|
depreciating asset in low-value pool |
40-445(2) |
|
|
expenditure in software development pool |
40-460 |
|
|
recovery of petroleum resource rent tax |
40-750(3) |
|
151 Section 10-5 (table item headed
“depreciation”)
Repeal the item, substitute:
|
depreciation |
|
|
|
see capital allowances |
|
|
152 Section 10-5 (table item headed
“intellectual property”)
Repeal the item.
153 Section 10-5 (after table item headed
“landcare operations)
Insert:
|
leased plant |
Division 45 |
|
154 Section 10-5 (table item headed
“leases”)
Omit “see also depreciation”.
155 Section 10-5 (table item headed
“mining”)
Repeal the item, substitute:
|
Mining |
|
|
|
providing mining, quarrying or prospecting information |
15-40 |
|
156 Section 10-5 (table item headed
“petroleum”)
Repeal the item, substitute:
|
petroleum |
|
|
|
resource rent tax, recovery of |
20-30(1) |
|
|
see also capital allowances |
|
|
157 Section 10-5 (table item headed
“pooled depreciated property”)
Repeal the item.
158 Section 10-5 (table item headed
“pooled software”)
Repeal the item.
159 Section 10-5
Insert:
|
Project pools |
|
|
|
An amount received for the abandonment, sale or other disposal of a
project |
|
|
160 Section 10-5 (table item headed
“software”)
Repeal the item.
161 Section 10-5 (table item headed
“spectrum licences”)
Repeal the item.
162 Section 10-5 (table item headed
“timber”)
Repeal the item.
163 Section 11-15 (table item headed
“mining”)
Omit:
|
rights to mine, sale of |
330-60 |
164 Section 12-5 (table item headed
“balancing adjustment”)
Repeal the item, substitute:
|
balancing adjustment |
|
|
|
see buildings, capital allowances, industrial
property, research & development and tax exempt
entities |
|
|
165 Section 12-5 (table item headed
“boats”)
Omit “depreciation”, substitute “capital
allowances”.
166 Section 12-5 (table item headed
“buildings”)
Repeal the item, substitute:
|
buildings |
|
|
|
income producing buildings, capital allowances |
Division 43 |
|
|
see also heritage conservation work |
|
|
167 Section 12-5 (table item headed
“capital allowances”)
Repeal the item, substitute:
|
capital allowances |
|
|
|
generally |
Division 40 |
|
|
balancing adjustments |
40-285(2), 40-370 |
|
|
business related costs |
40-880 |
|
|
electricity and telephone lines |
40-645 |
|
|
environmental protection activities |
40-755 |
|
|
exploration or prospecting |
40-80(1), 40-730 |
|
|
in-house software |
40-335, 40-455 |
|
|
intellectual property |
Subdivision 40-B |
|
|
IRUs |
Subdivision 40-B |
|
|
landcare operations |
40-630 |
|
|
low-value and software development pools |
Subdivision 40-E |
|
|
mining and quarrying |
Subdivision 40-H and Subdivision 40-I |
|
|
Petroleum Resource Rent Tax |
40-750 |
|
|
project pools |
40-830 |
|
|
reducing deductions |
40-25, 40-290 |
|
|
spectrum licences |
Subdivision 40-B |
|
|
trading ships, special depreciation |
57AM |
|
|
water facilities, horticultural plants and grapevines |
Subdivision 40-F |
|
168 Section 12-5 (table item headed
“car disposal”)
Omit “depreciation”, substitute “capital
allowances”.
169 Section 12-5 (table item headed
“controlled foreign companies”)
Repeal the item, substitute:
|
controlled foreign companies |
|
|
|
generally |
316 to 468 |
|
|
bad debts |
399A |
|
|
decline in value of depreciating assets |
398 |
|
|
finance share dividends |
394 |
|
|
taxes paid |
393 |
|
170 Section 12-5 (table item headed
“depreciation”)
Repeal the item, substitute:
|
depreciation |
|
|
|
see capital allowances |
|
|
171 Section 12-5 (table item headed
“disposal of depreciated property”)
Repeal the item, substitute:
|
disposal of depreciating assets |
|
|
|
see capital allowances |
|
|
172 Section 12-5 (table item headed
“electricity connections”)
Repeal the item, substitute:
|
electricity connections |
|
|
|
see capital allowances |
|
|
173 Section 12-5 (table item headed
“environment”)
Repeal the item, substitute:
|
environment |
|
|
|
see capital allowances |
|
|
174 Section 12-5 (table item headed
“exploration and prospecting”)
Repeal the item, substitute:
|
exploration and prospecting |
|
|
|
see capital allowances |
|
|
175 Section 12-5 (table item headed
“grape vines”)
Repeal the item, substitute:
|
grape vines |
|
|
|
see capital allowances |
|
|
176 Section 12-5 (table item headed
“GST—acquiring or upgrading plant to meet GST obligations
etc.”)
Repeal the item.
177 Section 12-5 (table item headed
“horticultural plants”)
Repeal the item, substitute:
|
horticultural plants |
|
|
|
see capital allowances |
|
|
178 Section 12-5 (table item headed
“intellectual property”)
Repeal the item, substitute:
|
intellectual property |
|
|
|
see capital allowances |
|
|
179 Section 12-5 (table item headed
“IRUs”)
Omit “depreciation”, substitute “capital
allowances”.
180 Section 12-5 (table item headed
“leases”)
Omit “see also depreciation”.
181 Section 12-5 (table item headed
“mining”)
Repeal the item, substitute:
|
mining |
|
|
|
gold mining |
159GZZG to 159GZZZBI |
|
|
uranium mining |
23D |
|
|
see also capital allowances |
|
|
182 Section 12-5 (table item headed
“petroleum prospecting and mining”)
Repeal the item.
183 Section 12-5 (table item headed
“plant and articles”)
Repeal the item.
184 Section 12-5 (table item headed
“pooled software”)
Repeal the item.
185 Section 12-5 (table item headed
“primary production”)
Repeal the item, substitute:
|
primary production |
|
|
|
drought investment allowance, generally |
625 to 684 |
|
|
farm management deposits |
393-1 to 393-65 of Schedule 2G |
|
|
income equalisation deposits |
159GA to 159GDA |
|
|
land, preparing, clearing, ploughing or draining land for use in primary
production and other activities |
|
|
|
see also capital allowances and timber |
|
|
186 Section 12-5 (table item headed
“property”)
Omit “, depreciation”.
187 Section 12-5 (table item headed
“quarrying”)
Repeal the item.
188 Section 12-5 (table item headed
“software”)
Repeal the item, substitute:
|
Software |
|
|
|
see capital allowances |
|
|
189 Section 12-5 (table item headed
“spectrum licences”)
Repeal the item, substitute:
|
spectrum licences |
|
|
|
see capital allowances |
|
|
190 Section 12-5 (table item headed
“timber”)
Repeal the item, substitute:
|
timber |
|
|
|
death of owner of land carrying trees, deduction of the part of land cost
attributable to trees |
|
|
|
disposal of land carrying trees, deduction of the part of land cost
attributable to trees |
|
|
|
felling trees, deduction of cost of land attributable to trees felled or of
cost of right to fell trees |
|
|
|
see also capital allowances |
|
|
191 Section 12-5 (table item headed
“trading ships”)
Omit “depreciation”, substitute “capital
allowances”.
192 Section 12-5 (table item headed
“water”)
Repeal the item, substitute:
|
water facilities |
|
|
|
see capital allowances |
|
|
193 Section 13-1 (table item headed
“primary production”)
Repeal the item, substitute:
|
primary production |
|
|
averaging of income, trustees |
156 |
|
averaging of tax liability, individuals |
392-35(2) |
|
exceptional circumstances relief payments see social security and other
benefit payments |
|
|
farm help income support payments see social security and other benefit
payments |
|
|
farm household support see social security and other benefit
payments |
|
194 At the end of
Division 15
Add:
(1) Your assessable income includes an amount you receive for providing
*mining, quarrying or prospecting information
to another entity if:
(a) you continue to *hold the
information; and
(b) the amount you receive is not assessable as
*ordinary income under
section 6-5.
(2) The amount included in your assessable income is reduced by so much of
the capital cost of acquiring the information that you have deducted or can
deduct as was incurred before 1 July 2001 if you started to
*hold the information before that
day.
195 At the end of
Division 17
Add:
This Division does not apply to assets, or to expenditure, for which you
can deduct amounts under Division 40 or Division 328.
Note: See instead Subdivision 27-B.
196 Section 20-5 (table
item 1)
Repeal the item, substitute:
|
1 |
A balancing adjustment for a depreciating asset is included in your
assessable income. |
40-285(1) and 40-445(2) |
197 Section 20-5 (table
item 3)
Omit “330-350(3)”, substitute
“40-750(3)”.
198 Section 20-5 (table
item 3A)
Repeal the item.
199 Subsection 20-30(1)
(table)
Repeal the table, substitute:
|
Provisions of the Income Tax Assessment Act 1997 |
||
|---|---|---|
|
Item |
Provision |
Description of expense |
|
1.1 |
8-1 (so far as it allows you to deduct a bad debt, or part of a debt that
is bad) |
bad debts |
|
1.2 |
8-1 (so far as it allows you to deduct rates or taxes) |
rates or taxes |
|
1.3 |
25-5 |
tax-related expenses |
|
1.4 |
25-35 |
bad debts |
|
1.5 |
25-45 |
embezzlement or larceny by an employee |
|
1.6 |
25-60 |
election expenses, Commonwealth and State elections |
|
1.7 |
25-75 |
rates and land taxes on premises used to produce mutual receipts |
|
1.8 |
25-80 |
upgrading assets to meet GST obligations etc. |
|
1.9 |
Division 40 |
capital allowances |
|
1.10 |
The former Division 42 (as it applied to
*software because of the former
Subdivision 46-B) |
expenditure on software |
|
1.11 |
The former Subdivision 46-C |
expenditure on software |
|
1.12 |
The former Subdivision 46-D |
expenditure on software, pooled |
|
1.13 |
The former Division 42 (as it applied to
*IRUs because of Division 44) |
expenditure on IRUs |
|
1.14 |
The former 330-15 |
exploration or prospecting expenditure |
|
1.15 |
The former 330-80 |
allowable capital expenditure relating to mining or quarrying |
|
1.16 |
The former 330-350 |
petroleum resource rent tax |
|
1.17 |
The former 330-370 |
transport capital expenditure relating to mining or quarrying |
|
1.18 |
The former 330-435 |
rehabilitation expenditure relating to mining or quarrying |
|
1.19 |
The former 330-485 |
balancing adjustment deduction for expenditure relating to mining or
quarrying |
|
1.20 |
The former Subdivisions 380-A and 380-C |
capital expenditure incurred in obtaining a spectrum licence |
|
1.21 |
The former Subdivision 387-A |
landcare operations expenditure |
|
1.22 |
The former Subdivision 387-B |
expenditure on facilities to conserve or convey water |
|
1.23 |
The former Subdivision 387-D |
grapevine establishment expenditure |
|
1.24 |
The former Subdivision 387-C |
horticultural plant establishment expenditure |
|
1.25 |
The former Subdivision 387-E |
mains electricity connection expenditure |
|
1.26 |
The former Subdivision 400-A |
expenditure on environmental impact assessment |
|
1.27 |
The former Subdivision 400-B |
expenditure on environmental protection activities |
200 Subsection 20-30(2) (after table
item 2.7)
Insert:
|
2.7A |
72A |
a payment of petroleum resource rent tax, or an instalment of petroleum
resource rent tax, or a credit under paragraph 99(d) of the Petroleum
Resource Rent Tax Assessment Act 1987 in respect of a payment of such an
instalment |
201 Subsection 20-40(2)
(example)
Repeal the example, substitute:
Example: At the start of the 2002-03 income year, a company
incurs $100,000 to start to hold a depreciating asset. The company uses the
prime cost method, and the effective life is 10 years. $10,000 is deductible for
the 2002-03 income year and for each of the following 9 income years under
section 40-25.
In the 2002-03 income year, the company receives $20,000 as
recoupment. How much is assessable for the 2002-03 income year?
Applying the method statement:
After step 1: the total assessable recoupment is
$20,000.
After step 2: the recoupment already assessed is
nil.
After step 3: the unassessed recoupment is:
total assessable recoupment minus recoupment already
assessed,
i.e.
$20,000 minus 0 = $20,000.
After step 4: the total deductions for the loss or outgoing
are $10,000.
After step 5: the outstanding deductions are:
total deductions for the loss or outgoing minus
recoupment already assessed, i.e. $10,000 minus 0 = $10,000.
After step 6: the unassessed recoupment (step 3) is greater
than outstanding deductions (step 5), so the amount of the outstanding
deductions is included in assessable income, i.e. $10,000.
Applying the method statement to the 2003-04 income year: a
further $10,000 is included in the company’s assessable
income.
202 Subsection 20-45(1)
(note)
Omit “section 40-25”, substitute
“Subdivision 40-D”.
203 Subsection 20-45(3)
(example)
Repeal the example, substitute:
Example: Continuing the example in subsection
20-40(2): at the start of the 2005-06 income year, the company:
• receives a further $10,000 as recoupment;
and
• sells the depreciating asset for
$75,000.
As a result of the sale, a balancing adjustment of $5,000
is included under section 40-285 in the company’s assessable income
for that income year.
How much of the recoupment amount received in the 2005-06
income year is assessable for that income year?
Applying the method statement in subsection
20-40(2):
After step 1: the total assessable recoupment is $30,000
(received during 2002-03 and 2005-06).
After step 2: the recoupment already assessed is $20,000
(for 2002-03 and 2003-04).
After step 3: the unassessed recoupment
is:
total assessable recoupment minus recoupment
already assessed,
i.e. $30,000 minus $20,000 =
$10,000.
After step 4: the total deductions for the loss or outgoing
are $30,000 ($10,000 for each of 2002-03, 2004-04 and 2004-05), reduced by
$5,000 (the amount included in assessable income for the balancing adjustment),
i.e. $25,000.
After step 5: the outstanding deductions are:
total deductions for the loss or outgoing minus
recoupment already assessed, i.e. $25,000 minus $20,000 =
$5,000.
After step 6: the unassessed recoupment (step 3) is greater
than outstanding deductions (step 5), so the amount of the outstanding
deductions is included in assessable income, i.e. $5,000.
204 Section 20-55 (after table
item 6)
Insert:
|
6A |
72A(4)(a) and (aa) |
petroleum resource rent tax |
205 At the end of
section 20-55
Add:
(2) Section 330-350 of this Act is also a previous recoupment
law.
206 Section 20-100
Omit “depreciation of the car”, substitute “the
car’s decline in value”.
207 Section 20-120
Omit “Subdivision 42-B (which is about working out the cost of
*plant for the purposes of
depreciation)”, substitute “Subdivision 40-C (which is about
working out the cost of *depreciating
assets)”.
208 Section 20-120
Omit “42-205”, substitute “40-300”.
209 Section 20-120 (note
1)
Omit “depreciation of the car”, substitute “the
car’s decline in value”.
210 Section 20-150
Omit “sections 42-190 and 42-240”, substitute
“sections 40-285 and 40-370”.
211 Section 20-150
(note)
Omit “sections 42-190 and 42-240”, substitute
“sections 40-285 and 40-370”.
212 Subsection 25-5(5)
(example)
Omit “depreciate your computer and deduct an amount under
Division 42”, substitute “deduct the decline in value of your
computer under Division 40”.
213 Subsection 25-10(1)
Omit “*plant”, substitute
“a *depreciating asset”.
214 Division 27 (after the
heading)
Insert:
Table of Subdivisions
Guide to Division 27
27-A General
27-B Division 40
215 After section 27-1
Insert:
216 At the end of
Division 27
Add:
This Subdivision does not apply to assets, or to expenditure, for which
you can deduct amounts under Division 40 or 328.
Note: See instead Subdivision 27-B.
Table of sections
27-80 Cost or opening adjustable value of depreciating
assets reduced for input tax credits
27-85 Cost or opening adjustable value of depreciating
assets reduced: decreasing adjustments
27-90 Cost or opening adjustable value of depreciating
assets increased: increasing adjustments
27-95 Balancing adjustment events
27-100 Pooling
27-105 Other Division 40 expenditure
27-110 Input tax credit etc. relating to 2 or more
things
(1) A *depreciating asset’s
*cost is reduced if:
(a) an entity’s acquisition or importation of the asset constitutes
a *creditable acquisition or
*creditable importation; and
(b) the entity is or becomes entitled to an
*input tax credit for the acquisition or
importation; and
(c) the entity can deduct amounts for the asset under
Division 40.
The reduction is the amount of the input tax credit.
(2) A *depreciating asset’s
*cost is also reduced if:
(a) the entity that *holds the asset
incurs expenditure that is included in the second element of the asset’s
cost for the income year in which the asset’s
*start time occurs; and
(b) the entity is or becomes entitled to an
*input tax credit for the
*creditable acquisition or
*creditable importation to which the
expenditure relates; and
(c) the entity can deduct amounts for the asset under
Division 40.
The reduction is the amount of the input tax credit.
(3) However, subsections (1) and (2) do not apply if the
*cost of the
*depreciating asset is modified under
Division 40 to be its *market
value.
(4) A *depreciating asset’s
*opening adjustable value for an income year is
reduced if:
(a) the entity that *holds the asset
incurs expenditure that is included in the second element of the asset’s
cost for that income year; and
(b) that income year is after the one in which the
asset’s*start time occurs; and
(c) the entity is or becomes entitled to an
*input tax credit for the
*creditable acquisition or
*creditable importation to which the
expenditure relates for the income year in which the expenditure was incurred;
and
(d) the entity can deduct amounts for the asset under
Division 40.
The reduction is the amount of the input tax credit.
(5) If the reduction under subsection (2) or (4) is more
than:
(a) for a subsection (2) case—the
*depreciating asset’s
*cost; or
(b) for a subsection (4) case—the depreciating asset’s
*opening adjustable value;
the excess is included in the entity’s assessable income unless the
entity is an *exempt entity.
Exception: pooling
(6) This section does not apply to:
(a) a depreciating asset allocated to a low-value pool or a pool under
Division 328; or
(b) *in-house software if expenditure on
the software is allocated to a software development pool; or
(c) a project pool.
(1) This section applies to an entity if:
(a) the entity can deduct amounts for a
*depreciating asset under Division 40;
and
(b) the entity has a *decreasing
adjustment in an income year that relates directly or indirectly to the
asset.
(2) The asset’s *cost is reduced by
an amount equal to the *decreasing adjustment
if the adjustment arises in the income year in which the asset’s
*start time occurs.
(3) The asset’s *opening adjustable
value for an income year is reduced by an amount equal to the
*decreasing adjustment if the adjustment arises
in that year and that year is after the one in which the
asset’s*start time occurs.
(4) If the reduction under subsection (2) or (3) is more
than:
(a) for a subsection (2) case—the
*depreciating asset’s
*cost; or
(b) for a subsection (3) case—the depreciating asset’s
*opening adjustable value;
the excess is included in the entity’s assessable income unless the
entity is an *exempt entity.
Exception: pooling
(5) This section does not apply to:
(a) a depreciating asset allocated to a low-value pool; or
(b) *in-house software if expenditure on
the software is allocated to a software development pool; or
(c) a project pool.
(1) This section applies to an entity if:
(a) the entity can deduct amounts for a
*depreciating asset under Division 40;
and
(b) the entity has an *increasing
adjustment in an income year that relates directly or indirectly to the
asset.
(2) The asset’s *cost is increased
by an amount equal to the *increasing
adjustment if the adjustment arises in the income year in which the
asset’s *start time occurs.
(3) The asset’s *opening adjustable
value for an income year is increased by an amount equal to the
*increasing adjustment if the adjustment arises
in that year and that year is after the one in which the asset’s
*start time occurs.
Exception: pooling
(4) This section does not apply to:
(a) a depreciating asset allocated to a low-value pool; or
(b) *in-house software if expenditure on
the software is allocated to a software development pool; or
(c) a project pool.
(1) The *termination value of a
*depreciating asset is reduced if the relevant
*balancing adjustment event is a
*taxable supply. The reduction is an amount
equal to the *GST payable on the
supply.
(2) However, subsection (1) does not apply if the
*termination value of the
*depreciating asset is modified under
Division 40 to be its *market
value.
(3) The *termination value of a
*depreciating asset is increased if the entity
that *held the asset has a
*decreasing adjustment that relates directly or
indirectly to that *taxable supply in the
income year in which the *balancing adjustment
event occurred. The increase is the amount of the decreasing
adjustment.
(4) The *termination value of a
*depreciating asset is decreased if the entity
that *held the asset has an
*increasing adjustment that relates directly or
indirectly to that *taxable supply in the
income year in which the *balancing adjustment
event occurred. The decrease is the amount of the increasing
adjustment.
(5) An amount is included in the assessable income of the entity that
*held the asset if the entity has a
*decreasing adjustment that relates directly or
indirectly to that *taxable supply in a later
income year. The amount included is the amount of the decreasing
adjustment.
(6) The entity that *held the asset can
deduct an amount if the entity has an
*increasing adjustment that relates directly or
indirectly to that *taxable supply in a later
income year. The amount it can deduct is the amount of the increasing
adjustment.
(1) This section contains special rules for expenditure (the pooled
expenditure) incurred by an entity:
(a) on a *depreciating asset allocated to
a low-value pool; or
(b) on a depreciating asset allocated to a pool under Division 328;
or
(c) on *in-house software if the
expenditure on the software is allocated to a software development pool;
and
(d) on *project amounts if the amounts
are allocated to a project pool.
Reduction to pools etc.
(2) There is a reduction under subsection (3), (4), or (5)
if:
(a) the pooled expenditure relates directly or indirectly to a
*creditable acquisition or
*creditable importation; and
(b) the entity is or becomes entitled to an
*input tax credit in an income year (the
credit year) for the acquisition or importation.
Low-value pools
(3) For a low-value pool, the *closing
pool balance of the pool for:
(a) if the credit year is later than the first income year for which
*depreciating assets were allocated to the
pool—the income year before the credit year; or
(b) if the credit year is the first income year for which
*depreciating assets were allocated to the
pool—the credit year;
is reduced by an amount equal to the input tax credit.
Software development pools and project pools
(4) For a software development pool or a project pool, the expenditure in
the pool for the credit year, or the *pool
value for the credit year, is reduced by an amount equal to the
*input tax credit.
STS pools
(5) For a pool under Division 328, the
*opening pool balance of the pool for the
credit year is reduced by an amount equal to the input tax credit.
Second element of cost
(6) There is a reduction under subsection (7) if:
(a) the entity incurs expenditure in an income year (also the credit
year) that is included in the second element of the
*cost of a
*depreciating asset allocated to a low-value
pool or a pool under Division 328; and
(b) the entity is or becomes entitled to an
*input tax credit for the
expenditure.
(7) An amount equal to the amount of the
*input tax credit is applied in reduction
of:
(a) for a low-value pool:
(i) if the credit year is later than the first income year for which
*depreciating assets were allocated to the
pool—the *closing pool balance of the
pool for the income year before the credit year; or
(ii) if the credit year is the first income year for which
*depreciating assets were allocated to the
pool—the *closing pool balance of the
pool for the credit year; or
(b) for a pool under Division 328—the
*opening pool balance of the pool for the
credit year.
Increasing adjustments
(8) There is an increase under subsection (9) if the entity has an
*increasing adjustment in an income year (the
adjustment year) that relates directly or indirectly to a
*creditable acquisition or
*creditable importation to which the pooled
expenditure relates.
(9) An amount equal to the amount of that
*increasing adjustment is added to:
(a) for a low-value pool:
(i) if the adjustment year is later than the first income year for which
*depreciating assets were allocated to the
pool—the *closing pool balance of the
pool for the income year before the adjustment year; or
(ii) if the adjustment year is the first income year for which
*depreciating assets were allocated to the
pool—the *closing pool balance of the
pool for the adjustment year; or
(b) for a pool under Division 328—the
*opening pool balance of the pool for the
adjustment year; or
(c) for *in-house software—the
amount of expenditure allocated to the software development pool for the
adjustment year; or
(d) for a project pool—the *pool
value for the adjustment year.
Decreasing adjustments
(10) There is a decrease under subsection (11) if the entity has a
*decreasing adjustment in an income year (also
the adjustment year) that relates directly or indirectly to a
*creditable acquisition or
*creditable importation to which the pooled
expenditure relates.
(11) An amount equal to the amount of the
*decreasing adjustment is applied in reduction
of:
(a) for a low-value pool:
(i) if the adjustment year is later than the first income year for which
*depreciating assets were allocated to the
pool—the *closing pool balance of the
pool for the income year before the adjustment year; or
(ii) if the adjustment year is the first income year for which
*depreciating assets were allocated to the
pool—the *closing pool balance of the
pool for the adjustment year; or
(b) for a pool under Division 328—the
*opening pool balance of the pool for the
adjustment year; or
(c) for *in-house software—the
amount of expenditure allocated to the software development pool for the
adjustment year; or
(d) for a project pool—the *pool
value for the adjustment year.
(12) If the amount available for reduction under subsection (11) is
more than the amount referred to in paragraph (11)(a), (b), (c) or (d)
(whichever is applicable), the excess is included in the entity’s
assessable income unless the entity is an
*exempt entity.
(1) This section applies to expenditure for which an entity can deduct
amounts under Division 40 (but not under Subdivision 40-B or 40-E, or
Subdivision 40-I to the extent that that Subdivision relates to project
pools).
(2) The amount of the expenditure is reduced if the entity is or becomes
entitled to an *input tax credit for a
*creditable acquisition or
*creditable importation to which the
expenditure directly or indirectly relates. The reduction is the amount of the
input tax credit that relates to that expenditure.
(3) If the entity has a *decreasing
adjustment in an income year that relates directly or indirectly to the
expenditure, an amount equal to the decreasing adjustment is included in the
entity’s assessable income for that income year.
(4) If the entity has an *increasing
adjustment in an income year that relates directly or indirectly to the
expenditure, the entity can deduct an amount equal to the increasing adjustment
for that income year.
(5) If the entity is a partnership and section 40-570 or 40-665
applies, an amount equal to the *input tax
credit, the *decreasing adjustment or the
*increasing adjustment is apportioned to each
of the partners as appropriate.
(6) However, this section does not apply to an
*exempt entity.
This Subdivision applies to an *input
tax credit, or an *increasing adjustment or
*decreasing adjustment, that relates directly
or indirectly to 2 or more things of which at least one is a
*depreciating asset as if a reasonable
proportion of the input tax credit or adjustment related directly or indirectly
to each of those depreciating assets and each of those other things.
217 Paragraph 28-13(2)(b)
Repeal the paragraph, substitute:
(b) the decline in value of a car.
218 Section 28-30
Repeal the section, substitute:
If a *balancing adjustment event occurs
for the *car, you will need to refer to the
capital allowances rules in Division 40 to find out how using this method
affects the operation of those rules. See section 40-370 (about balancing
adjustments for some cars).
219 Subsection 28-45(2)
Omit “car depreciation limit”, substitute
“*car limit”.
220 Subsection 28-45(2)
(note)
Repeal the note, substitute:
Note: Section 40-230 deals with the car
limit.
221 Section 28-55
Repeal the section, substitute:
If a *balancing adjustment event occurs
for the *car, you will need to refer to the
capital allowances rules in Division 40 to find out how using this method
affects the operation of those rules. See section 40-370 (about balancing
adjustments for some cars).
222 Subsection 35-45(2) (table
item 1)
Repeal the item, substitute:
|
1 |
An asset whose decline in value you can deduct under
Division 40 |
The asset’s *written down
value |
223 Paragraph 43-20(5)(a)
Repeal the paragraph, substitute:
(a) they are constructed as a result of carrying out of
*environmental protection activities;
and
224 Section 43-45
Repeal the section, substitute:
These anti-avoidance provisions:
(a) section 51AD (Deductions not allowable in respect of property
under certain leveraged arrangements) of the Income Tax Assessment Act
1936;
(b) Division 16D (Certain arrangements relating to the use of
property) of Part III of that Act;
apply to your deductions under this Division for an asset as if you were
the owner of the asset instead of any other person.
225 Paragraph 43-70(2)(f)
Repeal the paragraph, substitute:
(f) expenditure on property for which a deduction is allowable, or would
be allowable if the property were for use for the
*purpose of producing assessable income,
under:
(i) Subdivision 40-F (about primary production depreciating assets),
Subdivision 40-G (about capital expenditure of primary producers and other
landholders), Subdivision 40-H (about capital expenditure that is
immediately deductible) or Subdivision 40-I (about capital expenditure that
is deductible over time); or
(ii) the former Division 330 of this Act or Division 10, 10AAA
or 10AA of Part III of the Income Tax Assessment Act 1936 (all of
which deal with mining and/or quarrying); or
(iii) section 73A of the Income Tax Assessment Act 1936 (about
expenditure on scientific research); or
(iv) the former Subdivision 387-A of this Act or section 75D of
the Income Tax Assessment Act 1936 (both of which allow deductions for
capital expenditure to prevent land degradation); or
(v) the former Subdivision 387-B of this Act or section 75B of
the Income Tax Assessment Act 1936 (both of which allow deductions for
capital expenditure on facilities to conserve or convey water); or
(vi) the former Subdivision 387-G of this Act or section 124F or
124JA of the Income Tax Assessment Act 1936 (all of which allow
deductions for capital expenditure on forestry roads and/or timber mill
buildings); or
226 After paragraph
43-70(2)(f)
Insert:
(fa) any of these kinds of expenditure if a deduction is allowable for the
expenditure, or would be allowable if property had been used for the purpose of
producing assessable income:
(i) *mining capital expenditure or
*transport capital expenditure;
(ii) expenditure on a *forestry road in
connection with carrying on a *timber operation
for a *taxable purpose;
(iii) expenditure for the construction or acquisition of a
*timber mill building;
(iv) expenditure on a *depreciating asset
you can deduct under subsection 40-80(1) (about exploration and prospecting);
or
227 After
section 43-70
Insert:
(1) A forestry road is a road constructed primarily and
principally for the purpose of providing access to an area to enable:
(a) trees to be planted or tended in the area; or
(b) timber felled in the area to be removed.
For this purpose, a road includes any bridge, culvert or similar work
forming part of the road.
(2) A timber operation is:
(a) planting or tending trees for felling; or
(b) felling standing timber; or
(c) removing felled timber; or
(d) milling felled timber or processing it in another way.
(3) A timber mill building is a building:
(a) for use primarily and principally:
(i) in carrying on your *business of
milling timber for a *taxable purpose;
or
(ii) as residential accommodation for your employees engaged in connection
with the business, or for their dependants; and
(b) located in a forest, and in or adjacent to the area where timber
milled in the business is, or is to be, felled.
228 Division 44
Repeal the Division.
229 Paragraph 45-5(1)(a)
Omit “depreciation of *plant”,
substitute “the decline in value of
*plant”.
230 Paragraph 45-5(1)(b)
Omit “you owned or were the quasi-owner of the
*plant”, substitute “you
*held the plant”.
231 Paragraphs 45-5(3)(a) and
(b)
Repeal the paragraphs, substitute:
(a) you have deducted or can deduct an amount for the
*plant’s decline in value; and
(b) for most of the time when you *held
the plant, you leased it to another entity; and
232 Paragraphs 45-5(5)(b) and
(c)
Repeal the paragraphs, substitute:
(b) you apply it under section 40-365 (about offsetting balancing
adjustments); or
(c) roll-over relief is available for the disposal under
section 40-340.
233 Paragraph 45-10(1)(a)
Omit “depreciation”, substitute “the decline in
value”.
234 Paragraph 45-10(1)(c)
Repeal the paragraph, substitute:
(c) for most of the time when the partnership
*held the plant, it leased it to another
entity; and
235 Paragraph 45-10(3)(a)
Omit “depreciation”, substitute “the decline in
value”.
236 Paragraph 45-10(3)(c)
Repeal the paragraph, substitute:
(c) for most of the time when the partnership
*held the plant, it leased it to another
entity; and
237 Paragraph 45-10(5)(b)
Repeal the paragraph, substitute:
(b) you apply it under section 40-365 (about offsetting balancing
adjustments).
238 Subsection 45-15(4)
Repeal the subsection.
239 Paragraph 45-20(1)(a)
Omit “depreciation”, substitute “the decline in
value”.
240 Paragraph 45-20(1)(c)
Repeal the paragraph, substitute:
(c) for most of the time when the partnership
*held the plant, the plant was leased to
another entity; and
241 Subsection 45-20(4)
Repeal the subsection.
242 At the end of
Division 45
Add:
(1) Plant includes:
(a) articles, machinery, tools and rolling stock; and
(b) animals used as beasts of burden or working beasts in a
*business, other than a
*primary production business; and
(c) fences, dams and other structural improvements, other than those used
for domestic or residential purposes, on land that is used for agricultural or
pastoral operations; and
(d) structural improvements, other than a
*forestry road or structural improvements used
for domestic or residential purposes, on land used in a business
involving:
(i) planting or tending trees in a plantation or forest that are intended
to be felled; or
(ii) felling trees in a plantation or forest; or
(iii) transporting trees, or parts of trees, that you felled in a
plantation or forest to the place where they are first to be milled or
processed, or from which they are to be transported to the place where they are
first to be milled or processed; and
(e) structural improvements, other than those used for domestic or
residential purposes, that are used wholly for operations (carried out in the
course of a business) relating directly to:
(i) taking or culturing pearls or pearl shell; or
(ii) taking or catching trochus, bêche-de-mer or green
snails;
and that are situated at or near a port or harbour from which the
business is conducted; and
(f) structural improvements that are excluded from paragraph (c), (d)
or (e) because they are used for domestic or residential purposes if they are
provided for the accommodation of employees, tenants or sharefarmers who are
engaged in or in connection with the activities referred to in that
paragraph.
(2) Plant also includes plumbing fixtures and fittings
(including wall and floor tiles) provided by an entity mainly for:
(a) either or both:
(i) employees in a *business carried on
by the entity for the *purpose of producing
assessable income; or
(ii) employees in a business carried on for that purpose by a company that
is a member of the same *wholly-owned group of
which the entity is a member; or
(b) *children of any of those
employees.
(3) The written down value of a
*depreciating asset is its
*cost less the sum of:
(a) the amounts you have deducted or can deduct for its decline in value;
and
(b) if section 40-340 applied to your acquisition of it—the
amounts the transferor, and earlier successive transferors, deducted or can
deduct for its decline in value.
243 Division 46
Repeal the Division.
244 Division 58
Repeal the Division, substitute:
Table of Subdivisions
Guide to Division 58
58-A Application
58-B Calculating decline in value of privatised assets under
Division 40
This Division sets out special rules that apply in calculating deductions
for the decline in value of depreciating assets and balancing adjustments for
assets previously owned by an exempt entity if the assets:
• continue to be owned by that entity after the entity becomes
taxable; or
• are acquired from that entity, in connection with the acquisition
of a business, by a purchaser that is a taxable entity.
There is a choice of 2 methods for each depreciating asset:
• the notional written down value method; and
• the undeducted pre-existing audited book value method.
Table of sections
58-5 Application of Division
58-10 When an asset is acquired in connection with the
acquisition of a business
(1) This Division applies in 2 situations.
Entity sale
(2) The first (an entity sale situation) is where:
(a) at a particular time on or after 1 July 2001, an entity is an
exempt entity; and
(b) just after that time, the entity’s
*ordinary income or
*statutory income becomes to any extent
assessable income.
(3) In an entity sale situation:
(a) the entity is a transition entity; and
(b) the time when the entity’s
*ordinary income or
*statutory income becomes to that extent
assessable is the transition time; and
(c) the income year in which the
*transition time occurs is the transition
year for the entity; and
(d) the *depreciating assets the
*transition entity
*held just before the transition time are
privatised assets.
Asset sale
(4) The second (an asset sale situation) is where:
(a) at a particular time on or after 1 July 2001, an entity (the
purchaser) whose *ordinary income
or statutory income is to any extent assessable acquires a
*depreciating asset from an
*exempt entity; and
(b) the asset is acquired in connection with the acquisition of a
*business from the exempt entity.
(5) In an asset sale situation:
(a) the *exempt entity is the tax
exempt vendor; and
(b) the time when the *depreciating asset
is acquired is the acquisition time; and
(c) the income year in which the
*acquisition time occurs is the
acquisition year; and
(d) each *depreciating asset the
purchaser acquires from the *tax exempt vendor
at the acquisition time is a privatised asset.
(1) A *depreciating asset is taken to be
acquired in connection with the acquisition of a
*business from the
*exempt entity if and only if:
(a) the asset was used by the exempt entity in carrying on a business and
the purchaser or another person uses the asset in carrying on the business;
or
(b) subsection (2) applies.
(2) This subsection applies if:
(a) the asset was used by the *exempt
entity in performing functions, or engaging in activities, that did not
constitute the carrying on of a *business by
the exempt entity and the asset is used by the purchaser or another person in
performing those functions or engaging in those activities as part of carrying
on a business; or
(b) all of these subparagraphs apply:
(i) the acquisition by the purchaser of the asset was connected with the
acquisition of another asset by the purchaser or another person from the exempt
entity or from an *associate of the exempt
entity;
(ii) ownership of the other asset gives the purchaser or other person a
right, or imposes on the purchaser or other person an obligation, to perform
functions or engage in activities as part of the carrying on of a business or
confers on the purchaser or other person a commercial advantage or opportunity
in connection with performing functions or engaging in activities as part of the
carrying on of a business;
(iii) the asset is used by the purchaser or other person in performing
those functions or engaging in those activities under the right or obligation or
in taking the benefit of the advantage or opportunity; or
(c) the asset was acquired by the purchaser under an
*arrangement under which the purchaser or
another person acquired another asset from the exempt entity or from an
associate of the exempt entity and:
(i) the other asset is taken by paragraph (1)(a), or by
paragraph (a) or (b) of this subsection; or
(ii) where the other asset is not a depreciating asset, it would, if it
were a depreciating asset, be taken by paragraph (1)(a), or by
paragraph (a) or (b) of this subsection;
to be acquired in connection with the acquisition of a business from the
exempt entity.
(3) Paragraphs (2)(a), (b) and (c) do not apply if the asset is used
by the purchaser solely to derive assessable income from the provision of office
or residential accommodation.
Table of sections
58-60 Purpose of rules in this Subdivision
58-65 Choice of method to work out cost of privatised
asset
58-70 Application of Division 40
58-75 Meaning of notional written down
value
58-80 Meaning of undeducted pre-existing audited book
value
58-85 Pre-existing audited book value of depreciating
asset
58-90 Method for transition entity
This Subdivision sets out rules that affect the way in which the
*transition entity or the purchaser work out
the decline in value of, and balancing adjustments for,
*privatised assets under Division 40 after
the *transition time or the
*acquisition time.
(1) The *transition entity or the
purchaser has a choice to work out the first element of the
*cost of each
*privatised asset.
(2) The choice is to use either:
(a) the *notional written down value of
the asset; or
(b) the *undeducted pre-existing audited
book value (if any) of the asset.
(3) The choice must be made:
(a) for the *transition entity—by
the day on which the transition entity lodges its income tax return for the
*transition year; or
(b) for the purchaser—by the day on which the purchaser lodges the
purchaser’s income tax return for the
*acquisition year;
or within a further period allowed by the Commissioner.
(4) The choice, once made, cannot be changed.
Application of Division 40
(1) The *transition entity and the
purchaser work out the decline in value of, and the effect of a
*balancing adjustment event occurring for, each
*privatised asset using Division 40
(Capital allowances) as if the asset had been acquired under a contract entered
into on or after 1 July 2001.
Entity sale situation
(2) Division 40 applies to a
*privatised asset
*held by the
*transition entity as if the asset had not been
used, or *installed ready for use, for any
purpose before the *transition time.
(3) The first element of the *cost to the
*transition entity at the
*transition time is the
*notional written down value of the asset or
the *undeducted pre-existing audited book value
of the asset (depending on the choice made for the asset).
(4) No amount incurred before the
*transition time is included in the second
element of the *cost of a
*privatised asset.
Asset sale situation
(5) The first element of the *cost of a
*privatised asset to the purchaser at the
*acquisition time is the sum of:
(a) the *notional written down value of
the asset or the *undeducted pre-existing
audited book value of the asset (depending on the choice made for the asset);
and
(b) the amount of any incidental costs to the purchaser in acquiring the
asset.
(1) The notional written down value of a
*privatised asset is its
*adjustable value in the hands of:
(a) the *transition entity just before
the *transition time; or
(b) the *tax exempt vendor just before
the *acquisition time;
worked out using the assumptions in this section.
Application of Division 40
(2) Assume that Division 40 had always applied to work out the
decline in value of the *privatised
asset.
Use for taxable purposes
(3) Assume that, in applying Division 40 to the
*privatised asset, it had always been used by
the *transition entity or the
*tax exempt vendor wholly for
*taxable purposes.
Cost and acquisition time: exempt Australian government
agency
(4) If the *transition entity or the
*tax exempt vendor was an
*exempt Australian government agency just
before the *transition time and had acquired
the *privatised asset from another exempt
Australian government agency:
(a) assume that the transition entity or tax exempt vendor acquired it at
the time when it was acquired or constructed by the other exempt Australian
government agency and that the first element of its
*cost to the transition entity or tax exempt
vendor is the amount that was its cost to the other exempt Australian government
agency; or
(b) if it had, before its acquisition by the transition entity or tax
exempt vendor, been successively *held by 2 or
more exempt Australian government agencies—assume that:
(i) the transition entity or tax exempt vendor acquired it at the time
when it was acquired or constructed by the first of those exempt Australian
government agencies that owned it; and
(ii) the first element of its cost to the transition entity or tax exempt
vendor is the sum of the amount that was the first element of its cost to the
first of those exempt Australian government agencies that owned it and any
amount included in the second element of its cost for that first agency or a
later successive agency.
Effective life
(5) Assume that:
(a) the *transition entity or the
*tax exempt vendor had chosen to use an
*effective life determined by the Commissioner
for the *privatised asset as in force at the
*transition time or the
*acquisition time; and
(b) subsection 40-95(2) did not apply.
(6) Assume also that section 40-110 (about recalculating effective
life) did not apply.
(1) The undeducted pre-existing audited book value of a
*privatised asset is its
*adjustable value in the hands of:
(a) the *transition entity just before
the *transition time; or
(b) the *tax exempt vendor just before
the *acquisition time;
worked out using the assumptions in this section.
Application of Division 40
(2) Assume that Division 40 had always applied to work out the
decline in value of the *privatised
asset.
Use for taxable purposes
(3) Assume that, in applying Division 40 to the
*privatised asset, it had always been used by
the *transition entity or the
*tax exempt vendor wholly for
*taxable purposes.
Cost
(4) Assume that:
(a) the first element of the *privatised
asset’s *cost to the
*transition entity or the
*tax exempt vendor is its
*pre-existing audited book value as at the
latest time (the test time) at which it had a pre-existing audited
book value; and
(b) no amount was included in the second element of the asset’s cost
before the test time; and
(c) any amount included in the second element of the asset’s cost
after the test time had been incurred by the transition entity or the tax exempt
vendor.
Acquisition time
(5) Assume that the *transition entity or
the *tax exempt vendor had acquired the
*privatised asset at the test time.
Effective life
(6) Assume that:
(a) the *transition entity or the
*tax exempt vendor had chosen to use an
*effective life determined by the Commissioner
for the *privatised asset as in force at the
*transition time or the
*acquisition time; and
(b) subsection 40-95(2) did not apply.
(7) Assume also that section 40-110 (about recalculating effective
life) did not apply.
(1) A *privatised asset has a
pre-existing audited book value if:
(a) a balance sheet, as at the end of an annual accounting period (the
balance date), that was prepared as part of an
*exempt entity’s final accounts for that
period showed the asset as an asset of the exempt entity and specified a value
for it; and
(b) a qualified independent auditor who was engaged, or was required by
law, to undertake an audit of those accounts had prepared and signed, before
4 August 1997, a final audit report on those accounts; and
(c) the report did not state that the auditor was not satisfied that the
specified value fairly represented the value of the asset.
The asset is taken to have had a pre-existing audited book
value at the balance date of an amount equal to the specified
value.
(2) If a balance sheet did not specify a value for the asset but specified
a total value for 2 or more assets including the asset, the balance sheet is
taken to have specified as the value of the asset so much of that total value as
is reasonably attributable to the asset.
The *transition entity must, in working
out the decline in value of a *privatised
asset, use the *diminishing value method or the
*prime cost method for the asset that it used
to work out the *notional written down value,
or the *undeducted pre-existing audited book
value, of the asset.
245 Section 65-20
(note)
Before “Subdivision 388-A”, insert “the
former”.
246 Subsection 65-25(2) (table
item 2)
Before “Subdivision 388-A”, insert “the
former”.
247 At the end of subsection
65-25(2)
Add:
Note: Division 388 was repealed by the New Business
Tax System (Capital Allowances—Transitional Provisions and Consequential
Amendments) Act 2001.
248 Subsection 70-30(1)
(example)
Omit “a unit of depreciable plant”, substitute “a
depreciating asset”.
249 Subsection 70-30(1)
(example)
Omit “Subdivision 42-F provides for the consequences of selling
depreciated property”, substitute “Subdivision 40-D provides
for the consequences of selling depreciating assets”.
250 Subsection 70-65(3)
Omit “*undeducted cost”,
substitute “*adjustable
value”.
251 Section 70-110 (example
2)
Repeal the example, substitute:
Example 2: You stop holding an item as trading stock and
begin to use it as a depreciating asset for the purpose of producing your
assessable income. You are treated as having sold it for its cost. This amount
is assessable income, just like the proceeds of sale of any of your trading
stock.
You are also treated as having bought the item for the same
amount, which is relevant to working out the item’s cost for capital
allowance purposes (see Subdivision 40-C) and the item’s cost base
for CGT purposes (see Division 110).
252 Paragraph 86-85(b)
Omit “a unit of *plant”,
substitute “a *depreciating
asset”.
253 Section 86-85
Omit “depreciation of the plant”, substitute “the decline
in value of the asset”.
254 Paragraph 86-85(c)
Omit “plant”, substitute “depreciating
asset”.
255 At the end of
section 100-15
Add:
Note: Capital proceeds and cost base are not relevant for
CGT event K7.
256 Section 104-5 (table item
K1)
Repeal the item.
257 Section 104-5 (at the end of the
table)
Add:
|
K7 Balancing adjustment occurs for a depreciating asset that you used for
purposes other than taxable purposes |
When balancing adjustment event occurs |
Termination value less cost times fraction |
Cost less termination value times fraction |
258 Section 104-205
Repeal the section.
259 At the end of
Division 104
Add:
(1) CGT event K7 happens if:
(a) a *balancing adjustment event occurs
for a *depreciating asset you
*held; and
(b) at some time when you held the asset, you used it, or had it
*installed ready for use, for a purpose other
than a *taxable purpose.
(2) The time of *CGT event K7 is when the
*balancing adjustment event occurs.
(3) Any *capital gain or
*capital loss is worked out:
(a) under section 104-240; or
(b) under section 104-245 if the
*depreciating asset was allocated to a
low-value pool.
(4) A *capital gain or
*capital loss you make is disregarded
if:
(a) the *depreciating asset is a
*pre-CGT asset; or
(b) you can deduct an amount for the asset’s decline in value under
Division 328 (about STS taxpayers) for the income year in which the
*balancing adjustment event occurred.
(1) You make a capital gain if the
*depreciating asset’s
*termination value is more than its
*cost. The amount of the
*capital gain is:
where:
sum of reductions is the sum of the reductions in your
deductions for the asset under section 40-25.
total decline is the decline in value of the
*depreciating asset since you started to
*hold it.
Note: The CGT concepts of cost base and capital proceeds are
not relevant for this event.
(2) You make a capital loss if the
*depreciating asset’s
*cost is more than its
*termination value. The amount of the
*capital loss is:
where:
sum of reductions and total decline have the
same meanings as in subsection (1).
(1) You make a capital gain if the
*depreciating asset’s
*termination value is more than its
*cost. The amount of the
*capital gain is:
where:
taxable use fraction is the taxable use percentage (expressed
as a fraction) that you estimated for the asset when you allocated it to the
pool.
Note: The CGT concepts of cost base and capital proceeds are
not relevant for this event.
(2) You make a capital loss if the
*depreciating asset’s
*cost is more than its
*termination value. The amount of the
*capital loss is:
where:
taxable use fraction has the same meaning as in
subsection (1).
260 At the end of
section 106-5
Add:
(5) This section does not apply to a *CGT
event happening in relation to a *depreciating
asset.
261 Subsection 108-55(1)
Repeal the subsection, substitute:
(1) A building or structure on land that you
*acquired on or after 20 September
1985 is taken to be a separate *CGT asset from
the land if one of these balancing adjustment provisions applies to the building
or structure (whether or not there is a balancing adjustment):
(a) for *depreciating
assets—Subdivision 40-D; or
(b) for research and development—section 73B of the Income
Tax Assessment Act 1936.
Example: You construct a timber mill building on land you
own. The building is subject to a balancing adjustment on its disposal, loss or
destruction. It is taken to be a separate CGT asset from the
land.
262 Section 108-60
Repeal the section, substitute:
A *depreciating asset that is part of a
building or structure is taken to be a separate
*CGT asset from the building or
structure.
Example: You own a factory from which you carry on a
business. You install rest rooms for your employees. The plumbing fixtures and
fittings are depreciating assets. These are taken to be a separate CGT asset
from the factory.
263 Subsection 108-70(1)
Omit “the table in section 108-55”, substitute
“subsection 108-55(1)”.
264 Subsection 108-70(1)
(example)
Repeal the example, substitute:
Example: You own land that you use for pastoral operations.
You build some fences that are destroyed by fire. The fences are depreciating
assets and are subject to a balancing adjustment on their destruction under
Division 40. The fences are taken to be a separate CGT asset from the
land.
265 Paragraph 108-70(5)(d)
Omit “*plant”, substitute
“a *depreciating asset”.
266 Paragraph 108-75(1)(d)
Omit “*plant”, substitute
“a *depreciating asset”.
267 Subsection 108-75(2) (table
item 4)
Omit “*Plant”, substitute
“A *depreciating asset”.
268 Subsection 109-5(2) (table item
K1)
Repeal the item.
269 Section 110-10 (at the end of the
table)
Add:
|
K7 |
Balancing adjustment event happens to depreciating asset |
104-235 |
|---|
270 Subsection 110-45(2)
Repeal the subsection, substitute:
Other deductible expenditure
(2) Expenditure (except expenditure excluded by subsection (1B)) does
not form part of the cost base to the extent that you have
deducted or can deduct it for an income year, except so far as:
(a) the deduction has been reversed by an amount being included in your
assessable income for an income year by a provision of this Act (outside this
Part and Part 3-3 and Division 243); or
Note: Division 20 contains some of the provisions that
reverse deductions. Section 20-5 lists some others.
(b) the deduction would have been so reversed apart from a provision
listed in the table (relief from including a balancing charge in your assessable
income).
Note: In the table, provisions of the Income Tax
Assessment Act 1997 are identified in normal text. The other provisions,
in bold, are provisions of the Income Tax Assessment Act
1936.
|
Provisions for relief from including a balancing charge in your
assessable income |
||
|---|---|---|
|
Item |
Provision |
Subject matter |
|
1 |
section 40-340 |
Roll-over relief for *depreciating
asset |
|
2 |
section 40-365 |
Involuntary disposal of *depreciating
asset |
|
3 |
Section 73E |
Research and development activity expenditure |
271 Subsection 110-45(5)
Before “section 388-55”, insert “the
former”.
272 Subsection 110-50(5)
Before “section 388-55”, insert “the
former”.
273 Subparagraph
110-55(3)(a)(ii)
Omit “depreciation”, substitute “the decline in
value”.
274 Subparagraphs 110-55(3)(b)(i) and
(ii)
Repeal the subparagraphs, substitute:
(i) section 40-365; or
(ii) any of these former sections—section 42-285, 42-290 or
42-293; or
(iii) subsection 59(2A) or (2D) of the Income Tax Assessment Act
1936.
275 Subsection 110-55(5)
Repeal the subsection, substitute:
(5) The reduced cost base does not include an amount that
you could have deducted for a *CGT asset had
you used it wholly for the *purpose of
producing assessable income.
276 Subsection 110-55(6A)
Repeal the subsection, substitute:
(6A) Expenditure does not form part of the reduced cost
base to the extent that you chose a
*tax offset for it under the former
section 388-55 (about the landcare and water facility tax offset) instead
of deducting it.
277 Subparagraphs 110-60(1)(b)(i) and
(ii)
Repeal the subparagraphs, substitute:
(i) section 40-365; or
(ii) any of these former sections—section 42-285, 42-290 or
42-293; or
(iii) subsection 59(2A) or (2D) of the Income Tax Assessment Act
1936;
278 Subsection 110-60(3)
Repeal the subsection, substitute:
(3) Expenditure does not form part of an entity’s
reduced cost base for its interest in a
*CGT asset of a partnership to the extent that
a partnership in which the entity is or was a partner could have deducted an
amount for the asset if it had used it wholly for the
*purpose of producing assessable
income.
279 Subsection 110-60(4A)
Repeal the subsection, substitute:
(4A) Expenditure does not form part of an entity’s
reduced cost base for its interest in a
*CGT asset of a partnership to the extent that
the entity chose a *tax offset for the
expenditure under the former section 388-55 (about the landcare and water
facility tax offset) instead of deducting it.
280 Section 112-45 (table item
K1)
Repeal the item.
281 Section 112-115 (table
item 13)
Omit “Plant”, substitute “Depreciating
assets”.
282 Paragraph 115-25(3)(i)
Repeal the paragraph.
283 Paragraph 116-20(3)(b)
Repeal the paragraph, substitute:
(b) disregard any *depreciating assets
for whose decline in value the lessor has deducted or can deduct an amount under
this Act.
284 Subsection 116-20(4)
Omit “*plant”, substitute
“a *depreciating asset”.
285 Section 116-25 (table item
K1)
Repeal the item.
286 Section 116-25 (at the end of the
table)
Add:
|
K7 |
Balancing adjustment event happens to depreciating asset |
1, 2, 3, 4 |
None |
287 Subsection 116-30(4) (table item
K1)
Repeal the item.
288 Subsection 116-85(1) (table
item 2)
Omit “(about plant)”, substitute “(about depreciating
assets)”.
289 Subsection 118-10(1)
After “*cost base”, insert
“, or the first element of its *cost if
it is a *depreciating asset,”.
290 Subsection 118-10(3)
After “*cost base”, insert
“, or the first element of its *cost if
it is a *depreciating asset,”.
291 At the end of subsection
118-10(1)
Add:
Example: On 10 July 2001, Gayle buys a print for $450
and hangs it in her home. On 30 November 2001 she takes the print to her
office and hangs it in the lobby. Gayle self assesses the effective life of the
print to be 7 years.
Gayle sells the print to Anna for $700 on 2 January
2002.
How much can Gayle deduct for the 2001-02 income
year?
The cost of the print is $450. Gayle chooses to use the
prime cost method to calculate its decline in value.
The print’s decline in value is:
= $31
Gayle can deduct $6 as the taxable use portion of the
decline in value under Division 40:
Due to the balancing adjustment event that occurred on
2 January 2002, $54 is included in Gayle’s assessable income for the
2001-02 income year under section 40-285. The amount is reduced for
non-taxable use by section 40-290.
A capital gain of $202 is disregarded under this section
because the asset is a collectable acquired for less than $500.
292 Section 118-24
Repeal the section, substitute:
(1) A *capital gain or
*capital loss you make from a
*CGT event that is also a
*balancing adjustment event that happens to a
*depreciating asset is disregarded if the asset
was:
(a) a depreciating asset you *held;
or
(b) if you are a partner, a depreciating asset of the partnership;
or
(c) if you are absolutely entitled to the asset as against the trustee of
a trust (disregarding any legal disability), a depreciating asset of the
trustee;
where the decline in value of the asset was worked out under
Division 40 or Division 328, or would have been if the asset had been
used.
(2) However, subsection (1) does not apply to a
*capital gain or
*capital loss you make from
*CGT event K7 happening.
293 Section 118-45
Before “section 330-60”, insert “the
former”.
294 Subsection 122-25(3)
Repeal the subsection, substitute:
(3) A precluded asset is:
(a) a *depreciating asset; or
(b) *trading stock; or
(c) an interest in the copyright in a film referred to in
section 118-30.
295 Paragraph 124-75(2)(a)
Repeal the paragraph, substitute:
(a) incur expenditure in *acquiring
another *CGT asset (except a
*depreciating asset); or
296 At the end of subsection
124-75(5)
Add “, nor can it be a *depreciating
asset”.
297 Subsection 124-80(2)
Repeal the subsection, substitute:
(2) The other asset cannot become an item of your
*trading stock just after you
*acquire it, nor can it be a
*depreciating asset.
298 Subsection 124-85(2)
(example)
Repeal the example, substitute:
Example: In 1999 Simon bought a small factory. In 2000 a
fire destroys part of it. He receives $100,000 under an insurance
policy.
The capital gain is worked out under
section 112-30.
Suppose the factory’s cost base at the time of the
fire is $75,000 and the market value of the part that is not destroyed is
$150,000. The cost base of the part that is destroyed is:
The capital gain is:
Case 1
Suppose Simon spent $80,000 on repairing the factory. The
money he received under the insurance policy exceeds the repair cost by $20,000.
The gain exceeds that by $50,000.
The result is that the gain is reduced to $20,000 and the
$80,000 he spent on repairs is reduced to $30,000.
Case 2
Suppose Simon spent $15,000 on repairs instead. The money
he received under the policy exceeds that amount by $85,000. This is more than
the gain he made.
The gain is relevant to working out Simon’s net
capital gain or loss for the income year and the $15,000 he spent on repairs
forms part of the factory’s cost base.
Case 3
Suppose Simon spent $120,000 on repairs instead. The gain
is disregarded and the $120,000 is reduced to $50,000.
299 Subdivision 124K
(heading)
Repeal the heading, substitute:
300 Section 124-655
Repeal the section, substitute:
There is a roll-over for a *depreciating
asset if:
(a) the asset is attached to land you hold under a
*quasi-ownership right granted by an
*exempt Australian government agency or an
*exempt foreign government agency;
and
(b) you *hold the asset because of
section 40-40; and
(c) the quasi-ownership right expires or is terminated or you surrender
it; and
(d) you are granted a new quasi-ownership right over the land or an estate
in fee simple in the land; and
(e) there is no roll-over for you under Subdivision 124-J (about
Crown leases) or Subdivision 124-L (about prospecting and mining
entitlements).
Note 1: The roll-over consequences are set out in
Subdivision 124-A.
Note 2: This section provides a roll-over for a depreciating
asset in the limited circumstances where Subdivision 124-J cannot because a
quasi-ownership right over land covers situations that a Crown lease does not
(for example, an easement over land).
Note 3: If there has been a capital improvement to the
quasi-ownership right: see section 108-75.
301 Paragraph 124-660(a)
Repeal the paragraph, substitute:
(a) your *reduced cost base of the
*depreciating asset is reduced by the
*adjustable value of the asset just before the
original quasi-ownership right expired or was surrendered or terminated;
and
302 Paragraph 132-10(2)(b)
Repeal the paragraph, substitute:
(b) the *cost of any
*depreciating asset for which the lessor has
deducted or can deduct an amount for the asset’s decline in value under
this Act.
303 Section 136-10 (table item
K1)
Repeal the item.
304 Section 136-10 (at the end of the
table)
Add:
|
K7 |
Balancing adjustment event happens to a depreciating asset |
the depreciating asset |
2 |
305 Section 138-5
Omit “Depreciable plant” (wherever occurring), substitute
“Depreciating asset that is plant”.
306 Section 138-5 (note
1)
Omit “depreciable plant”, substitute “a depreciating
asset that is plant”.
307 Subdivision 138-B
(heading)
Repeal the heading, substitute:
308 Paragraph 138-85(1)(b)
Repeal the paragraph, substitute:
(b) it involved *plant (that is not a
building or structure) for whose decline in value the originating company has
deducted or can deduct an amount; and
309 Subsection 138-100(1) (example
1)
Omit “depreciable asset”, substitute “depreciating asset
that is plant”.
310 Section 138-110
Omit “depreciable plant group”, substitute
“*depreciating asset
group”.
Note: The heading to section 138-110 is altered by
omitting “depreciable plant” and substituting
“depreciating assets that are plant”.
311 Section 138-360
Omit “depreciable *plant
group”, substitute “*depreciating
asset group”.
312 Subsection 138-365(3)
Repeal the subsection, substitute:
(3) An additional condition for allocating a
*CGT asset to a
*depreciating asset group is that the asset is
*plant for whose decline in value the
originating company has deducted or can deduct an amount.
313 Section 138-370
Repeal the section, substitute:
There is an additional condition that must be satisfied before you can
apply this Division to a *depreciating asset
group. The sum of the market values of the assets in the group must not be more
than 110% of the sum of those residual values.
314 Subsection 152-10(1)
After “*capital gain”, insert
“(except a capital gain from *CGT event
K7)”.
315 Paragraphs 165-55(2)(a), (b) and
(c)
Repeal the paragraphs, substitute:
(a) deductions for the decline in value of a
*depreciating asset;
See Division 40.
(b) deductions for *exploration or
prospecting, or *mining capital expenditure, in
connection with mining or quarrying;
See section 40-80 and
Subdivisions 40-H and 40-I.
(c) deductions for expenditure, deductions for which are spread over 2 or
more income years, but not:
(i) deductions for exploration or prospecting, or capital expenditure, in
connection with mining or quarrying; or
See Subdivision 40-I.
(ii) *full year deductions (see
subsection (5));
316 Subsection 165-115F(6)
Repeal the subsection, substitute:
(6) This subsection applies to an asset at the relevant time if:
(a) the asset is a *depreciating asset
(not a building or structure) for whose decline in value the company has
deducted or can deduct an amount; and
(b) the expenditure incurred by the company to
*acquire the asset was less than $1,000,000
(the expenditure can include the giving of property: see section 103-5);
and
(c) it would be reasonable for the company to conclude that the
*market value of the asset at that time was not
less than 80% of its *written down value at
that time.
317 Subsection 165-115R(6)
(note)
Repeal the note, substitute:
Note: Where the income tax law allows, as all or part of a
loss, an amount for the decline in value of a depreciating asset that exceeds
the actual economic depreciation or depletion of the asset concerned, the excess
is not to be regarded for the purposes of this subsection as representing an
outlay or loss of economic resources of the company.
318 Subsection 165-115S(6)
(note)
Repeal the note, substitute:
Note: Where the income tax law allows, as all or part of a
loss, an amount for the decline in value of a depreciating asset that exceeds
the actual economic depreciation or depletion of the asset concerned, the excess
is not to be regarded for the purposes of this subsection as representing an
outlay or loss of economic resources of the company.
319 Subsection 165-115V(7)
Repeal the subsection, substitute:
(7) This subsection applies to an asset at the alteration time
if:
(a) the asset is a *depreciating asset
(not a building or structure) for whose decline in value the company has
deducted or can deduct an amount; and
(b) the expenditure incurred by the company to
*acquire the asset was less than $1,000,000
(the expenditure can include the giving of property: see section 103-5);
and
(c) it would be reasonable for the company to conclude that the market
value of the asset at the alteration time was not less than 80% of its
*written down value at that time.
320 Subsection 170-210(3B)
(note)
Repeal the note, substitute:
Note: Where the income tax law allows, as all or part of a
loss, an amount for the decline in value of a depreciating asset that exceeds
the actual economic depreciation or depletion of the asset concerned, the excess
is not to be regarded for the purposes of this subsection as representing an
outlay or loss of economic resources of the company.
321 Subsection 170-215(4A)
(note)
Repeal the note, substitute:
Note: Where the income tax law allows, as all or part of a
loss, an amount for the decline in value of a depreciating asset that exceeds
the actual economic depreciation or depletion of the asset concerned, the excess
is not to be regarded for the purposes of this subsection as representing an
outlay or loss of economic resources of the company.
322 Subsection 170-220(3B)
(note)
Repeal the note, substitute:
Note: Where the income tax law allows, as all or part of a
loss, an amount for the decline in value of a depreciating asset that exceeds
the actual economic depreciation or depletion of the asset concerned, the excess
is not to be regarded for the purposes of this subsection as representing an
outlay or loss of economic resources of the company.
323 Subsection 170-225(4A)
(note)
Repeal the note, substitute:
Note: Where the income tax law allows, as all or part of a
loss, an amount for the decline in value of a depreciating asset that exceeds
the actual economic depreciation or depletion of the asset concerned, the excess
is not to be regarded for the purposes of this subsection as representing an
outlay or loss of economic resources of the company.
324 Paragraph 320-255(2)(a)
Omit “Division 42”, substitute
“Division 40”.
325 Subsection 320-255(5)
Repeal the subsection, substitute:
(5) If a *depreciating asset is
transferred from the *segregated exempt assets
of a *life insurance company, the company must
assume, for the purposes of Division 40, that the asset had, at all times
during the period beginning when it was acquired or constructed by the company
and ending immediately before the time of the transfer, been used by the company
wholly for the *purpose of producing assessable
income.
326 Subsection 320-255(6)
Omit “an asset that is a unit of
*plant”, substitute “a
*depreciating asset”.
327 Subsection 320-255(6)
Omit “Division 42”, substitute
“Division 40”.
328 Subsection 320-255(7)
Repeal the subsection, substitute:
(7) If a *depreciating asset that has
been included in the *segregated exempt assets
of a *life insurance company since the asset
was acquired by the company or the initial segregation of those assets took
place is transferred from those assets, then the company must assume for the
purposes of Division 40 that:
(a) if the asset’s *market value at
the time of the transfer is greater than its
*notional adjustable value at that time, the
company:
(i) had, at the time immediately before the transfer, sold the asset for a
consideration equal to its notional adjustable value at that time; and
(ii) had, at the time of the transfer, purchased the asset again for a
consideration equal to its notional adjustable value at that time; or
(b) if the asset’s market value at the time of the transfer is equal
to or less than its notional adjustable value at that time, the
company:
(i) had, at the time immediately before the transfer, sold the asset for a
consideration equal to its market value at that time; and
(ii) had, at the time of the transfer, purchased the asset again for a
consideration equal to its market value at that time.
329 Subsection 320-255(8)
Omit “an asset that is a unit of
*plant”, substitute “a
*depreciating asset”.
330 Subsection 320-255(8)
Omit “Division 42”, substitute
“Division 40”.
331 Division 330
Repeal the Division.
332 Division 373
Repeal the Division.
333 Division 380
Repeal the Division.
334 Section 385-5 (table
item 3)
Omit “Division 387”, substitute
“Subdivisions 40-F and 40-G”.
335 Division 387
Repeal the Division.
336 Division 388
Repeal the Division.
337 Paragraph 396-45(4)(a)
Omit “*plant”, substitute
“*depreciating assets”.
338 Paragraph 396-45(4)(c)
Omit “plant”, substitute “depreciating
assets”.
339 Division 400
Repeal the Division.
340 Paragraph 900-30(7)(a)
Omit “depreciation”, substitute “the decline in
value”.
341 Subsection 900-115(1)
Omit “depreciation”, substitute “the decline in value of
a *depreciating asset”.
342 Section 900-120
Repeal the section, substitute:
(1) You may use this set of rules only for a
*depreciating asset expense.
(2) You must get evidence of the original acquisition of the
*depreciating asset. It must be a document that
you get from the supplier of the asset and that specifies:
(a) the name or business name of the supplier; and
(b) the cost of the asset to you; and
(c) the nature of the asset; and
(d) the day you acquired the asset; and
(e) the day it is made out.
(3) However, if the document the supplier gave you does not specify
the nature of the asset, you may write in the missing details yourself before
you lodge your *income tax return for the
income year in which you first claim a deduction for the decline in value of the
asset.
(4) If you don’t get the document in time, for example because you
only decided to use the asset for income-producing purposes several years after
you acquired it, there are rules that might help you in Subdivision 900-H
(Relief from effects of failing to substantiate).
(5) The document must be in English. However, if you
*imported the asset into Australia, the
document can instead be in a language of the country from which the asset was
originally exported.
343 Subsection 900-125(3)
Omit “depreciation”, substitute “the decline in value of
a *depreciating asset”.
344 Subsection 900-125(4)
Omit “depreciation” (first occurring), substitute “the
decline in value of a *depreciating
asset”.
345 Paragraph 900-125(4)(b)
Omit “depreciation”, substitute “decline in
value”.
346 Subsection 900-220(3)
Omit “depreciation of property”, substitute “the decline
in value of a *depreciating
asset”.
347 Section 960-265 (table
item 1)
Repeal the item, substitute:
|
1 |
Car limit |
section 40-230 |
|---|
348 Subsection 960-280(2)
Omit “*car depreciation limit under
Subdivision 42-K”, substitute
“*car limit”.
349 Subsection 995-1(1) (definition of
abnormal income)
Repeal the definition.
350 Subsection 995-1(1) (definition of
acquisition time)
Omit “section 58-150”, substitute
“section 58-5”.
351 Subsection 995-1(1) (definition of
acquisition year)
Omit “section 58-150”, substitute
“section 58-5”.
352 Subsection 995-1(1)
Insert:
adjustable value of a
*depreciating asset has the meaning given by
section 40-85.
353 Subsection 995-1(1) (definition of
allowable capital expenditure)
Repeal the definition.
354 Subsection 995-1(1) (definition of amount
arising)
Repeal the definition.
355 Subsection 995-1(1) (definition of
ancillary activities)
Repeal the definition.
356 Subsection 995-1(1)
Insert:
ancillary mining activities has the meaning given by
section 40-740.
357 Subsection 995-1(1) (definition of
approved management plan)
Omit “387-80”, substitute “40-640”.
358 Subsection 995-1(1) (definition of available
assessable income)
Repeal the definition.
359 Subsection 995-1(1) (definition of
balancing adjustment event)
Repeal the definition, substitute:
balancing adjustment event has the meaning given by
section 40-295.
360 Subsection 995-1(1) (definition of
capital allowance)
Repeal the definition, substitute:
capital allowance means a deduction under:
(a) Division 40 (capital allowances) of this Act; or
(b) Subdivision B of Division 3 of Part III of the Income Tax
Assessment Act 1936 (development allowance); or
(c) Part XII of that Act (drought investment allowance); or
(d) Division 10BA of Part III of that Act (Australian films);
or
(e) Division 10B of Part III of that Act (copyright in
Australian films); or
(f) section 73B of that Act (research and development).
361 Subsection 995-1(1) (definition of cash
bidding exploration or prospecting authority)
Repeal the definition.
362 Subsection 995-1(1) (definition of car
depreciation limit)
Repeal the definition.
363 Subsection 995-1(1)
Insert:
car limit has the meaning given by
section 40-230.
364 Subsection 995-1(1) (definition of
closing balance)
Repeal the definition, substitute:
closing pool balance has the meaning given by:
(a) for a low-value pool—section 40-440; or
(b) for a *general STS pool or a
*long life STS
pool—section 328-200.
365 Subsection 995-1(1)
Insert:
closing pool value has the meaning given by
section 40-830.
366 Subsection 995-1(1) (definition of
commercial horticulture)
Omit “subsection 387-170(4)”, substitute
“40-535”.
367 Subsection 995-1(1) (definition of
concentration)
Repeal the definition.
368 Subsection 995-1(1) (definition of
connecting power to land or upgrading the
connection)
Omit “subsections 387-360(1) and (2)”, substitute
“section 40-655”.
369 Subsection 995-1(1) (paragraph (a) of
the definition of cost)
Repeal the paragraph, substitute:
(a) cost of a *depreciating
asset has the meaning given by Subdivision 40-C; and
370 Subsection 995-1(1)
Insert:
creditable importation has the meaning given by
section 195-1 of the *GST Act.
371 Subsection 995-1(1)
Insert:
datacasting transmitter licence has the meaning given by
section 5 of the Radiocommunications Act 1992.
372 Subsection 995-1(1)
Insert:
depreciating asset has the meaning given by
section 40-30.
373 Subsection 995-1(1) (definition of
diminishing value method)
Repeal the definition, substitute:
diminishing value method has the meaning given by
section 40-70.
374 Subsection 995-1(1) (definition of
diminishing value rate)
Repeal the definition.
375 Subsection 995-1(1) (definition of
effective life)
Repeal the definition, substitute:
effective life: the effective life of a
*depreciating asset is worked out under
sections 40-95, 40-100, 40-105 and 40-110.
376 Subsection 995-1(1) (definition of
eligible building site)
Repeal the definition.
377 Subsection 995-1(1) (definition of
eligible mining operations)
Repeal the definition.
378 Subsection 995-1(1) (definition of
eligible mining or quarrying operations)
Repeal the definition.
379 Subsection 995-1(1) (definition of
eligible quarrying operations)
Repeal the definition.
380 Subsection 995-1(1) (definition of
entitlement to an eligible cash bidding amount)
Repeal the definition.
381 Subsection 995-1(1) (definition of
environmental protection activities)
Omit “subsection 400-60(1)”, substitute
“section 40-755”.
382 Subsection 995-1(1) (definition of excess
deduction rules)
Repeal the definition.
383 Subsection 995-1(1) (definition of
expenditure)
Repeal the definition.
384 Subsection 995-1(1) (definition of
expenditure on software)
Repeal the definition.
385 Subsection 995-1(1) (definition of
exploration or prospecting)
Omit “330-20”, substitute “40-730”.
386 Subsection 995-1(1) (definition of
exploration or prospecting authority)
Repeal the definition.
387 Subsection 995-1(1) (definition of
exploration or prospecting cash bidding payment)
Repeal the definition.
388 Subsection 995-1(1) (definition of
forestry road)
Omit “subsection 387-465(1)”, substitute
“section 43-72”.
389 Subsection 995-1(1) (definition of
genuine prospector)
Repeal the definition.
390 Subsection 995-1(1) (definition of
hold)
Repeal the definition, substitute:
hold:
(a) hold a car for the purposes of Division 28 has the
meaning given by section 28-90; and
(b) hold a *depreciating
asset has the meaning given by section 40-40.
391 Subsection 995-1(1) (definition of
horticultural plant)
Omit “subsection 387-170(1)”, substitute
“section 40-520”.
392 Subsection 995-1(1) (definition of
horticulture)
Omit “subsection 387-170(3)”, substitute
“section 40-535”.
393 Subsection 995-1(1) (definition of
horticulture business)
Repeal the definition.
394 Subsection 995-1(1)
Insert:
in-house software is computer software, or a right to use
computer software, that you acquire, develop or have another entity
develop:
(a) that is mainly for you to use in performing the functions for which
the software was developed; and
(b) for which you cannot deduct amounts under a provision of this Act
outside Division 40.
395 Subsection 995-1(1) (definition of
instalment of petroleum resource rent tax)
Repeal the definition, substitute:
instalment of petroleum resource rent tax is an instalment of
tax payable under Division 2 of Part VIII of the Petroleum Resource
Rent Tax Assessment Act 1987.
396 Subsection 995-1(1) (definition of
intellectual property)
Repeal the definition, substitute:
intellectual property: an item of intellectual
property consists of the rights (including equitable rights) that an
entity has under a *Commonwealth law
as:
(a) the patentee, or a licensee, of a patent; or
(b) the owner, or a licensee, of a registered design; or
(c) the owner, or a licensee, of a copyright;
or of equivalent rights under a *foreign
law.
397 Subsection 995-1(1) (definition of
IRU)
Repeal the definition, substitute:
IRU is an indefeasible right to use an international
telecommunications submarine cable system.
398 Subsection 995-1(1) (definition of
landcare operation)
Omit “387-60”, substitute “40-635”.
399 Subsection 995-1(1) (definition of
low-cost plant)
Repeal the definition.
400 Subsection 995-1(1)
Insert:
low-cost asset has the meaning given by
section 40-425.
401 Subsection 995-1(1)
Insert:
low-value asset has the meaning given by
section 40-425.
402 Subsection 995-1(1) (definition of
low-value pool)
Repeal the definition.
403 Subsection 995-1(1) (definition of
metering point)
Omit “subsection 387-360(3)”, substitute
“section 40-655”.
404 Subsection 995-1(1) (definition of method
of depreciation)
Repeal the definition.
405 Subsection 995-1(1) (definition of
minerals)
Omit “section 330-25”, substitute
“section 40-730”.
406 Subsection 995-1(1)
Insert:
minerals treatment has the meaning given by
section 40-875.
407 Subsection 995-1(1) (definition of mining
authority)
Repeal the definition.
408 Subsection 995-1(1) (definition of mining
cash bidding payment)
Repeal the definition.
409 Subsection 995-1(1)
Insert:
mining building site has the meaning given by
section 40-740.
410 Subsection 995-1(1)
Insert:
mining capital expenditure has the meaning given by
section 40-860.
411 Subsection 995-1(1)
Insert:
mining operations has the meaning given by
section 40-730.
412 Subsection 995-1(1) (definition of mining
or quarrying transport)
Repeal the definition.
413 Subsection 995-1(1) (definition of
mining, quarrying or prospecting information)
Omit “330-240”, substitute “40-730”.
414 Subsection 995-1(1) (definition of
mining, quarrying or prospecting right)
Repeal the definition, substitute:
mining, quarrying or prospecting right is:
(a) an authority, licence, permit or right under an
*Australian law to mine, quarry or prospect for
minerals, *petroleum or quarry materials;
or
(b) a lease of land that allows the lessee to mine, quarry or prospect for
minerals, petroleum or quarry materials on the land; or
(c) an interest in such an authority, licence, permit, right or lease;
or
(d) any rights that:
(i) are in respect of buildings or other improvements (including anything
covered by the definition of housing and welfare) that are on the
land concerned or are used in connection with operations on it; and
(ii) are acquired with such an authority, licence, permit, right, lease or
interest.
However, a right in respect of anything covered by the definition of
housing and welfare in relation to a quarrying site is not a
mining, quarrying or prospecting right.
415 Subsection 995-1(1)
Insert:
mining site rehabilitation has the meaning given by
section 40-735.
416 Subsection 995-1(1) (definition of new
spectrum licence)
Repeal the definition.
417 Subsection 995-1(1)
Insert:
notional adjustable value of a
*depreciating asset means its
*adjustable value reduced by the amounts
assumed under subsection 320-255(6) to have been deducted for its decline in
value.
418 Subsection 995-1(1) (definition of
notional depreciation amount)
Repeal the definition.
419 Subsection 995-1(1) (definition of
notional income)
Repeal the definition.
420 Subsection 995-1(1) (definition of
notional undeducted cost)
Repeal the definition.
421 Subsection 995-1(1) (definition of
notional written down value)
Repeal the definition, substitute:
notional written down value of a
*depreciating asset has the meaning given by
section 58-75.
422 Subsection 995-1(1) (definition of old
spectrum licence)
Repeal the definition.
423 Subsection 995-1(1)
Insert:
opening adjustable value of a
*depreciating asset has the meaning given by
section 40-85.
424 Subsection 995-1(1) (definition of
opening balance)
Repeal the definition.
425 Subsection 995-1(1) (definition of
partial realisation)
Repeal the definition.
426 Subsection 995-1(1) (definition of
petroleum)
Omit “330-25”, substitute “40-730”.
427 Subsection 995-1(1) (definition of
petroleum mining)
Repeal the definition.
428 Subsection 995-1(1) (definition of
petroleum resource rent tax)
Repeal the definition, substitute:
petroleum resource rent tax means tax imposed by the
Petroleum Resource Rent Tax Act 1987, as assessed under the Petroleum
Resource Rent Tax Assessment Act 1987.
429 Subsection 995-1(1) (definition of
plant)
Omit “42-18”, substitute “45-40”.
430 Subsection 995-1(1) (definition of plant
lease)
Repeal the definition.
431 Subsection 995-1(1) (definition of plant
lessee)
Repeal the definition.
432 Subsection 995-1(1) (definition of
pool)
Repeal the definition.
433 Subsection 995-1(1) (definition of pool
closing balance)
Repeal the definition.
434 Subsection 995-1(1) (definition of
pre-existing audited book value)
Repeal the definition, substitute:
pre-existing audited book value of a
*depreciating asset has the meaning given by
section 58-85.
435 Subsection 995-1(1) (definition of
pre-mining condition)
Repeal the definition.
436 Subsection 995-1(1) (definition of prime
cost method)
Repeal the definition, substitute:
prime cost method has the meaning given by
section 40-75.
437 Subsection 995-1(1) (definition of prime
cost rate)
Repeal the definition.
438 Subsection 995-1(1)
Insert:
privatised asset has the meaning given by
section 58-5.
439 Subsection 995-1(1) (definition of
processed materials)
Repeal the definition.
440 Subsection 995-1(1)
Insert:
processed minerals has the meaning given by
section 40-875.
441 Subsection 995-1(1)
Insert:
project amount has the meaning given by
section 40-840.
442 Subsection 995-1(1)
Insert:
project life has the meaning given by
section 40-845.
443 Subsection 995-1(1) (definition of
purpose of producing assessable income, notes 1 and
2)
Repeal the notes, substitute:
Note: These provisions treat use of property as not
being for the purpose of producing assessable income:
• section 32-15 (about using property in
providing entertainment)
444 Subsection 995-1(1) (definition of
qualifying interest)
Repeal the definition.
445 Subsection 995-1(1) (definition of
qualifying purpose)
Repeal the definition.
446 Subsection 995-1(1) (definition of quarry
materials)
Repeal the definition.
447 Subsection 995-1(1) (definition of
quasi-owner)
Repeal the definition.
448 Subsection 995-1(1) (definition of
rehabilitation)
Repeal the definition.
449 Subsection 995-1(1)
Insert:
remaining effective life of a
*depreciating asset has the meaning given by
section 40-75.
450 Subsection 995-1(1) (definition of
related)
Repeal the definition.
451 Subsection 995-1(1) (definition of
replace)
Repeal the definition.
452 Subsection 995-1(1) (definition of
retention authority)
Repeal the definition.
453 Subsection 995-1(1) (definition of
roll-over event)
Repeal the definition.
454 Subsection 995-1(1) (definition of
short-term hire agreement)
Repeal the definition, substitute:
short-term hire agreement: a short-term hire
agreement is an agreement for the intermittent hire of an asset on an
hourly, daily, weekly or monthly basis. However, an agreement for the hire of an
asset is not a short-term hire agreement if, having regard to any
other agreements for the hire of the same asset to the same taxpayer or an
*associate of that taxpayer, there is a
substantial continuity of hiring so that the agreements together are for longer
than a short-term basis.
455 Subsection 995-1(1) (definition of
software)
Repeal the definition.
456 Subsection 995-1(1) (definition of
software pool)
Repeal the definition.
457 Subsection 995-1(1)
Insert:
start time of a
*depreciating asset has the meaning given by
section 40-60.
458 Subsection 995-1(1)
Insert:
taxable purpose has the meaning given by
section 40-25.
459 Subsection 995-1(1) (definition of tax
exempt vendor)
Omit “section 58-150”, substitute
“section 58-5”.
460 Subsection 995-1(1) (definition of
termination value)
Repeal the definition, substitute:
termination value has the meaning given by
section 40-300.
461 Subsection 995-1(1) (definition of test
time)
Omit “58-10,”.
462 Subsection 995-1(1) (definition of timber
mill building)
Omit “subsection 387-465(3)”, substitute
“section 43-72”.
463 Subsection 995-1(1) (definition of timber
operation)
Omit “subsection 387-465(2)”, substitute
“section 43-72”.
464 Subsection 995-1(1) (definition of
transition entity)
Omit “section 58-15”, substitute
“section 58-5”.
465 Subsection 995-1(1) (definition of
transition time)
Omit “section 58-15”, substitute
“section 58-5”.
466 Subsection 995-1(1) (definition of
transition year)
Omit “section 58-15”, substitute
“section 58-5”.
467 Subsection 995-1(1) (definition of
transport capital expenditure)
Omit “330-375”, substitute “40-865”.
468 Subsection 995-1(1) (definition of
transport facility)
Omit “330-380”, substitute “40-870”.
469 Subsection 995-1(1) (definition of
treatment)
Repeal the definition.
470 Subsection 995-1(1) (definition of
undeducted cost)
Repeal the definition.
471 Subsection 995-1(1) (definition of
undeducted pre-existing audited book value)
Repeal the definition, substitute:
undeducted pre-existing audited book value of a
*depreciating asset has the meaning given by
section 58-80.
472 Subsection 995-1(1) (definition of
unrecouped expenditure)
Repeal the definition.
473 Subsection 995-1(1) (definition of water
facility)
Omit “387-130”, substitute “40-520”.
474 Subsection 995-1(1) (definition of
written down value)
Repeal the definition, substitute:
written down value of a
*depreciating asset has the meaning given by
section 45-40.
475 Subsection 995-1(1) (definition of years
remaining)
Repeal the definition.
476 Subsection 995-1(1) (definition of your
earning activity)
Omit “subsection 400-60(3)”, substitute
“section 40-755”.
477 Subsection 3(1) (definition of reduced
notional income)
Repeal the definition, substitute:
reduced notional income, in relation to a taxpayer deriving a
notional income in the year of income, as specified in:
(a) section 59AB or 86 of the Assessment Act; or
(b) the former section 42-300 of the Income Tax Assessment Act
1997;
means the amount that would be that notional income if that notional income
had been calculated by reference to the reduced taxable income instead of by
reference to the taxable income.
478 Subsection 12(5)
Before “section 42-295”, insert “the
former”.
479 Schedule 9
Before “section 42-300” (wherever occurring), insert
“the former”.
480 After paragraph
1075(1)(b)
Insert:
(ba) amounts that relate to the business and can be deducted for the
decline in value of depreciating assets under Subdivision 40-B of the
Income Tax Assessment Act 1997; and
481 After subparagraph
1185K(3)(d)(ii)
Insert:
(iia) amounts that relate to a relevant farm asset and can be deducted for
the decline in value of the asset under Subdivision 40-B of the Income
Tax Assessment Act 1997; and
482 After paragraph
1208B(1)(b)
Insert:
(ba) amounts that relate to the business or investment and can be deducted
for the decline in value of depreciating assets under Subdivision 40-B of
the Income Tax Assessment Act 1997; and
483 After paragraph
1209C(1)(b)
Insert:
(ba) amounts that relate to the primary production enterprise and can be
deducted for the decline in value of depreciating assets under
Subdivision 40-B of the Income Tax Assessment Act 1997;
and
Veterans’
Entitlements Act 1986
484 After paragraph
46C(1)(b)
Insert:
(ba) amounts that relate to the business and can be deducted for the
decline in value of depreciating assets under Subdivision 40-B of the
Income Tax Assessment Act 1997; and
485 After subparagraph
49J(3)(f)(ii)
Insert:
(iia) amounts that relate to a relevant farm asset and can be deducted for
the decline in value of the asset under Subdivision 40-B of the Income
Tax Assessment Act 1997; and
486 After paragraph
52ZZO(1)(b)
Insert:
(ba) amounts that relate to the business or investment and can be deducted
for the decline in value of depreciating assets under Subdivision 40-B of
the Income Tax Assessment Act 1997; and
487 After paragraph
52ZZZO(1)(b)
Insert:
(ba) amounts that relate to the primary production enterprise and can be
deducted for the decline in value of depreciating assets under
Subdivision 40-B of the Income Tax Assessment Act 1997;
and
488 Application
(1) Subject to subitem (2), the amendments made by this Schedule apply
to:
(a) depreciating assets:
(i) you start to hold under a contract entered into after 30 June
2001; or
(ii) you constructed where the construction started after that day;
or
(iii) you start to hold in some other way after that day; and
(b) expenditure that does not form part of the cost of a depreciating
asset incurred after that day.
(2) The amendment made by item 244 applies where the transition time
or acquisition time, as the case may be, referred to in Division 58
inserted in the Income Tax Assessment Act 1997 by that item is a time on
or after 1 July 2001.
Taxation Laws Amendment
Act (No. 1) 2001
1 Subsection 240-3(4)
Omit “for depreciation (under Division 42) or under any of the
other capital allowances (listed in Division 40)”, substitute
“under Division 40 (about capital allowances)”.
2 Subsection 240-7(2)
Repeal the subsection, substitute:
(2) If the property is not trading stock, the notional buyer may be able
to deduct amounts for the expenditure under Division 40 (about capital
allowances)”.
3 Subsection 240-90(4)
Omit “for the purpose of calculating the depreciation allowable to
that person for the car, would have been reduced because of the operation of
section 42-80”, substitute “for the purpose of working out its
decline in value for that person under Division 40, would have been limited
by section 40-230”.
4 Subsection 240-90(5)
Repeal the subsection, substitute:
(5) Where an associate of the *notional
buyer acquires the *car, the
*cost of the car for the purposes of the
application of Division 40 to the associate is taken to be whichever is the
lesser of:
(a) the sum of:
(i) the amount that would have been the
*adjustable value of the car at that time for
the purposes of the application of that Division to the notional buyer if the
notional buyer were not taken under this Division to have disposed of the car;
and
(ii) any amount that is included in the notional buyer’s assessable
income under section 40-285 because the notional buyer is taken to have
disposed of the car; or
(b) the cost of the acquisition of the car by the associate.
5 Subsection 243-35(3)
Repeal the subsection, substitute:
(3) The reference in step 2 of the method statement in subsection (2)
to an amount that is included in the assessable income of a taxpayer as a result
of the disposal of the *financed property
includes a reference to an amount that is included under section 26AG of
the Income Tax Assessment Act 1936 as a result of the disposal of the
financed property.
Note: Division 20 deals with amounts included to
reverse the effect of past deductions.
6 Application
The amendments made by this Schedule apply to arrangements entered into on
or after 1 July 2001.