Taxation Laws Amendment (Research and Development) Act 2001 (170 of 2001)

Schedule 2   Plant etc.

Part 3   Effective life basis for deduction

Division 2   Amendments commencing immediately after the New Business Tax System (Capital Allowances) Act 2001

Income Tax Assessment Act 1936

61   After section 73E

Insert:

73EA Section 73BF roll-over relief on disposal of asset to another member of wholly-owned group

Roll-over relief where CGT roll-over relief allowed

(1) This section applies to the disposal of a section 73BA depreciating asset by an eligible company (the transferor ) to another eligible company (the transferee ) if:

(a) the disposal involves a CGT event for which there is a roll-over under Subdivision 126-B of the Income Tax Assessment Act 1997 (or would be, disregarding the exemption in section 118-5 of that Act, so far as it relates to a car, motor cycle or similar vehicle, or to an interest in one); and

(b) Subdivision 170-D of the Income Tax Assessment Act 1997 does not apply to the disposal; and

(c) subject to subsection (5), a deduction or deductions have been allowed or are allowable to the transferor in respect of the asset under section 73BA or 73BH, or would have been so allowed or allowable if the company had not chosen a tax offset under section 73I; and

(d) no deduction has been allowed or is allowable to the transferor in respect of the asset under:

(i) Division 40 (capital allowances) of the Income Tax Assessment Act 1997; or

(ii) Division 42 (depreciation of plant) of that Act as in force before its repeal by the New Business Tax System (Capital Allowances) Act 2001.

No balancing charges for transferor

(2) Section 73BF does not apply in respect of the disposal of the asset by the transferor.

Effect on transferee

(3) The transferee is entitled to a deduction under section 73BA worked out using the same effective life and method for working out decline in value as the transferor was using in respect of the asset under that section.

Additional consequences

(4) For the purposes of Division 45 of the Income Tax Assessment Act 1997:

(a) if the transferor, or a partnership of which the transferor was a member, leased the asset to another entity for most of the time when the transferor or partnership held the asset - the transferee is taken also to have done so; and

(b) if the transferor, or a partnership of which the transferor was a member, leased the asset to another entity - the transferee is taken also to have done so; and

(c) if the main business of the transferor, or a partnership of which the transferor was a member, was to lease assets of that kind - the main business of the transferee is taken also to have been to lease assets of that kind.

Subsequent applications of roll-over relief - relief available even if no deduction for subsequent transferor

(5) If, apart from this subsection, this section has applied to the disposal of the section 73BA depreciating asset to the transferee, then, in working out whether it applies to a subsequent disposal of the asset by:

(a) the transferee; or

(b) one or more subsequent successive transferees;

this section has effect as if paragraph (1)(c) (which deals with deductions) were ignored.

Notice to allow transferee to work out how this section applies

(6) The transferor must give the transferee a notice containing enough information about the transferor's holding of the asset for the transferee to work out how this section applies to the transferee's holding of it.

(7) The transferor must give the notice within 6 months after the end of the transferee's year of income in which the disposal mentioned in subsection (1) occurred, or within a longer period allowed by the Commissioner.

(8) The transferee must keep the notice until the end of 5 years after the earlier of these events:

(a) the transferee disposes of the asset;

(b) the asset is lost or destroyed.

Penalty: 30 penalty units.

(9) The Criminal Code applies to the offence in subsection (8).