CHAPTER 3
-
SPECIALIST LIABILITY RULES
PART 3-10
-
FINANCIAL TRANSACTIONS
History
Part 3-10 inserted by No 72 of 2001.
Division 250
-
Assets put to tax preferred use
History
Div 250 inserted by
No 164 of 2007
, s 3 and Sch 1 item 1, effective 25 September 2007.
No 164 of 2007
, s 3 and Sch 1 item 71 contains the following application provision:
Application
(1)
Subject to subitems (4), (6) and (8), Division 250 applies in relation to a tax preferred use of an asset if, and only if, the tax preferred use:
(a)
starts on or after 1 July 2007; and
(b)
does not occur under a legally enforceable arrangement that was entered into before 1 July 2007.
(2)
This subitem applies to an asset that is put to a tax preferred use if:
(a)
the tax preferred use starts on or after 1 July 2007; and
(b)
the tax preferred use occurs under a legally enforceable arrangement that was entered into before 1 July 2007; and
(c)
but for this subitem:
(i)
section
51AD
would apply to the asset in relation to a taxpayer; or
(ii)
Division
16D
would apply to the asset; and
(d)
you elect to have this subitem apply to the asset.
(3)
An election under paragraph (2)(d) in relation to an asset that is put to a tax preferred use:
(a)
must be made by the day you lodge your income tax return for the income year in which the tax preferred use starts; and
(b)
must be made for the whole of the arrangement period for the tax preferred use of the asset; and
(c)
must extend to all assets that are, or are to be, put to a tax preferred use under the arrangement under which the asset is put to that use; and
(d)
is irrevocable.
(4)
If subitem (2) applies:
(a)
section
51AD
and Division
16D
do not apply to the asset; and
(b)
Division 250 applies to the tax preferred use of the asset.
(5)
This subitem applies to an asset that is put to a tax preferred use if:
(a)
the tax preferred use starts on or after 1 July 2007; and
(b)
the tax preferred use occurs under a legally enforceable arrangement that was entered into before 1 July 2007; and
(c)
immediately before 1 July 2007:
(i)
section
51AD
did not apply to the asset in relation to a taxpayer; and
(ii)
Division
16D
did not apply to the asset; and
(d)
the arrangement referred to in paragraph (b) is materially altered on or after 1 July 2007; and
(e)
but for this subitem and subitem (6):
(i)
section
51AD
would apply to the asset in relation to a taxpayer immediately after the alteration; or
(ii)
Division
16D
would apply to the asset immediately after the alteration.
For the purposes of applying paragraph (c), assume that the asset was in existence and was being put to the tax preferred use immediately before 1 July 2007.
(6)
If subitem (5) applies:
(a)
section
51AD
and Division
16D
do not apply to the asset; and
(b)
Division 250 applies to the tax preferred use of the asset after the alteration instead.
(7)
This subitem applies to an asset that is put to a tax preferred use if:
(a)
the tax preferred use started before 1 July 2007; and
(b)
immediately before 1 July 2007:
(i)
section
51AD
did not apply to the asset in relation to a taxpayer; and
(ii)
Division
16D
did not apply to the asset; and
(c)
the arrangement under which the tax preferred use of the asset occurs is materially altered on or after 1 July 2007; and
(d)
but for this subitem and subitem (8):
(i)
section
51AD
would apply to the asset in relation to a taxpayer immediately after the alteration; or
(ii)
Division
16D
would apply to the asset immediately after the alteration.
(8)
If subitem (7) applies:
(a)
section
51AD
and Division
16D
do not apply to the asset; and
(b)
Division 250 applies to the tax preferred use of the asset after the alteration instead.
(9)
For the purposes of applying subparagraphs (5)(c)(ii) and (e)(ii) and (7)(b)(ii) and (d)(ii), disregard the operation of section
159GL
of the
Income Tax Assessment Act 1936
.
(10)
For the purposes of applying Division 250 to the tax preferred use of an asset in accordance with subitem (6) or (8), the
arrangement period
for the tax preferred use of the asset is taken to start on the day on which the alteration referred to in paragraph (5)(d) or (7)(c) occurs.
(11)
Section
51AD
does not apply to an asset for the income year commencing on 1 July 2007, or a later income year, if:
(a)
the asset is put to a tax preferred use under a legally enforceable arrangement; and
(b)
the arrangement was entered into before 1 July 2007; and
(c)
the tax preferred use of the asset starts on or after 1 July 2003 and before 1 July 2007.
…
(13)
In this item:
arrangement
has the same meaning as in the
Income Tax Assessment Act 1997
.
asset
includes property (within the meaning of section
51AD
and Division
16D
).
Division 16D
means Division
16D
of Part
III
of the
Income Tax Assessment Act 1936
.
Division 250
means Division 250 of the
Income Tax Assessment Act 1997
.
section 51AD
means section
51AD
of the
Income Tax Assessment Act 1936
.
tax preferred use
has the same meaning as in the
Income Tax Assessment Act 1997
.
Subdivision 250-F
-
Treatment of asset when Division ceases to apply to the asset
History
Subdiv 250-F inserted by
No 164 of 2007
, s 3 and Sch 1 item 1, effective 25 September 2007. For application provision, see note under Div
250
heading.
SECTION 250-285
Treatment of asset after Division ceases to apply to the asset
250-285(1)
For the purposes of Division
40
, if:
(a)
this Division applies to you and an asset; and
(b)
the *arrangement period for the *tax preferred use of the asset ends at a particular time; and
(c)
the asset would have had an *adjustable value at that time, for the purposes of Division
40
, if this Division had never applied to the asset;
the adjustable value of the asset, immediately after the end of the arrangement period, is taken to be equal to the amount worked out using the following method statement:
Method statement
Step 1.
Work out whether section
250-150
applies.
Step 2.
If section
250-150
does not apply, the amount is the *end value of the asset at the end of the arrangement period.
Step 3.
If section
250-150
does apply, the amount is worked out by:
(a) multiplying the *end value of the asset at the end of the *arrangement period by the *disallowed capital percentage; and
(b) then multiplying the adjustable value of the asset at the end of the arrangement period (worked out under section
40-85
) by 100% minus the disallowed capital percentage); and
(c) then adding the amount obtained under paragraph (a) and the amount obtained under paragraph (b).
250-285(2)
If:
(a)
this Division applies to you and an asset; and
(b)
the *arrangement period for the *tax preferred use of the asset ends; and
(c)
a net amount is included in your assessable income in relation to the *financial benefits that are *subject to the deemed loan treatment (taking into account the adjustments under Subdivision
250-E
in relation to the financial benefits that are subject to the deemed loan treatment);
the *cost base, and the *reduced cost base, of the asset are each taken to be reduced at the end of the arrangement period by an amount equal to the difference between:
(d)
the total amounts or values of the financial benefits that were subject to deemed loan treatment; and
(e)
the net amount referred to in paragraph (c).
Note:
See subsection (6) in relation to the application of paragraph (d).
250-285(3)
If:
(a)
this Division applies to you and an asset; and
(b)
the *arrangement period for the *tax preferred use of the asset ends; and
(c)
a net amount is allowed to you as a deduction in relation to the *financial benefits that are *subject to the deemed loan treatment (taking into account the adjustments under Subdivision
250-E
in relation to the financial benefits that are subject to the deemed loan treatment);
the *cost base, and the *reduced cost base, of the asset are each taken to be reduced at the end of the arrangement period by an amount equal to the sum of:
(d)
the total amounts or values of the financial benefits that were subject to deemed loan treatment; and
(e)
the net amount referred to in paragraph (c).
Note:
See subsection (6) in relation to the application of paragraph (d).
250-285(4)
If:
(a)
this Division applies to you and an asset; and
(b)
the *arrangement period for the *tax preferred use of the asset ends; and
(c)
a net amount is included in your assessable income in relation to the *financial benefits that are *subject to the deemed loan treatment (taking into account the adjustments under Subdivision
250-E
in relation to the financial benefits that are subject to the deemed loan treatment);
then, in determining the profit or loss on the sale of the asset, a deduction equal to the difference between the following is taken to have been allowed for expenditure by you in connection with the asset:
(d)
the total amounts or values of the financial benefits that were subject to deemed loan treatment; and
(e)
the net amount referred to in paragraph (c).
Note:
See subsection (6) in relation to the application of paragraph (d).
250-285(5)
If:
(a)
this Division applies to you and an asset; and
(b)
the *arrangement period for the *tax preferred use of the asset ends; and
(c)
a net amount is allowed to you as a deduction in relation to the *financial benefits that are *subject to the deemed loan treatment (taking into account the adjustments under Subdivision
250-E
in relation to the financial benefits that are subject to the deemed loan treatment);
then, in determining the profit or loss on the sale of the asset, a deduction equal to the sum of the following is taken to have been allowed for expenditure by you in connection with the asset:
(d)
the total amounts or values of the financial benefits that were subject to deemed loan treatment; and
(e)
the net amount referred to in paragraph (c).
Note:
See subsection (6) in relation to the application of paragraph (d).
250-285(6)
In applying paragraphs (2)(d), (3)(d), (4)(d) and (5)(d), disregard subsection
250-160(2)
(reasonable estimate of end value treated as financial benefit subject to deemed loan treatment).
History
S 250-285 inserted by
No 164 of 2007
, s 3 and Sch 1 item 1, effective 25 September 2007. For application provision, see note under Div
250
heading.
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