Income Tax (Transitional Provisions) Act 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-10 - CAPITAL ALLOWANCES: RULES ABOUT DEDUCTIBILITY OF CAPITAL EXPENDITURE  

Division 40 - Capital allowances  

Subdivision 40-BB - Temporary full expensing of depreciating assets  

SECTION 40-165   Exclusions - entities covered by section 40-155 or 40-157  

40-165(1)    
For the purposes of subsection 40-160(2) , an exclusion applies to you and an asset for an income year if:

(a)    

where paragraph 40-160(2)(a) applies - section 40-155 would not cover you for the income year if the reference in that section to $5 billion were instead a reference to $50 million; and

(b)    any of the exclusions in this section applies in relation to the asset.

Exclusion - commitments already entered into

40-165(2)    
This exclusion applies in relation to the asset if, before the 2020 budget time, you:

(a)    entered into a contract under which you would hold the asset; or

(b)    started to construct the asset; or

(c)    started to hold the asset in some other way.

40-165(3)    
This exclusion applies in relation to the asset (the post-6 October 2020 asset ) if:

(a)    on a day before 6 October 2020, you:

(i) enter into a contract under which you hold an asset on that day, or will hold the asset on a later day; or

(ii) start to construct an asset; or

(iii) start to hold an asset in some other way; and

(b)    on a day on or after 6 October 2020 (the conduct day ), you engage in conduct that results in you:

(i) entering into a contract under which you hold the post-6 October 2020 asset on the conduct day, or will hold that asset on an even later day; or

(ii) starting to construct the post-6 October 2020 asset; or

(iii) starting to hold the post-6 October 2020 asset in some other way; and

(c)    the post-6 October 2020 asset is the asset mentioned in paragraph (a), or an identical or substantially similar asset; and

(d)    you engage in that conduct for the purpose, or for purposes that include the purpose, of satisfying paragraph 40-160(1)(a) for the post-6 October 2020 asset.

40-165(4)    
For the purposes of subsections (2) and (3), treat yourself as having started to construct an asset at a time if you first incur expenditure in respect of the construction of the asset at that time.

40-165(5)    
To avoid doubt, for the purposes of this section, you do not enter into a contract under which you hold an asset merely because you acquire an option to enter into such a contract.

40-165(6)    
For the purposes of subsections (2), (3), (4) and (5), if a partner in a partnership does any of the following things, treat the partnership (instead of the partner) as having done the thing:

(a)    entering into a contract under which the partnership would hold an asset;

(b)    starting to construct an asset;

(c)    acquiring an option to enter into such a contract.

Exclusion - second hand assets

40-165(7)    
This exclusion applies in relation to the asset if:

(a)    another entity held the asset when it was first used, or first installed ready for use, other than:

(i) as trading stock; or

(ii) merely for the purposes of reasonable testing or trialling; or

(b)    you started holding the asset under section 40-115 of the Income Tax Assessment Act 1997 (about splitting a depreciating asset) or section 40-125 of that Act (about merging depreciating assets); or

(c)    you already satisfied paragraph 40-160(1)(a) of this Act for the asset as a member of a consolidated group or a MEC group of which you are no longer a member.

40-165(8)    
The exclusion in subsection (7) also applies in relation to an asset if:

(a)    the asset is a licence (including a sub-licence) relating to an intangible asset; and

(b)    the exclusion in that subsection applies in relation to the intangible asset.

40-165(9)    
However, paragraph (7)(a) does not apply in relation to an intangible asset unless the asset was used for the purpose of producing ordinary income before you first used it, or had it installed ready for use, for any purpose. In applying this subsection, disregard ordinary income that arises as a result of the disposal of the asset to you.