Income Tax Assessment Act 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-5 - RULES ABOUT DEDUCTIBILITY OF PARTICULAR KINDS OF AMOUNTS  

Division 25 - Some amounts you can deduct  

Operative provisions  

SECTION 25-47   Misappropriation where a balancing adjustment event occurs  

25-47(1)    
You can deduct an amount if:

(a) a *balancing adjustment event occurs for a *depreciating asset you *held; and

(b) your employee or *agent misappropriates (whether by theft, embezzlement, larceny or otherwise) all or part of the amount applicable to you under:

(i) item 8 of the table in subsection 40-300(2) ; or

(ii) item 1, 3, 4 or 6 of the table in subsection 40-305(1) ;

in relation to the balancing adjustment event.

Note 1:

The amount applicable to you under subsection 40-300(2) or 40-305(1) may be the market value of an asset or of a non-cash benefit.

Note 2:

If you receive an amount as recoupment of the amount misappropriated, the amount may be included in your assessable income: see Subdivision 20-A .

25-47(2)    
The amount you can deduct is so much of the amount misappropriated as represents an amount applicable to you under item 8 of the table in subsection 40-300(2) or item 1, 3, 4 or 6 of the table in subsection 40-305(1) in relation to the *balancing adjustment event.

25-47(3)    
You can deduct the amount for the income year in which the misappropriation happens.

25-47(4)    
You must reduce the amount you can deduct under this section if your deductions for the asset have been reduced under section 40-25 because of use for a purpose other than a *taxable purpose. The reduction is by the same proportion you reduce the balancing adjustment amount for the asset under section 40-290 .

25-47(4A)    

You must further reduce the amount you can deduct under this section if your deductions for the asset have been reduced under section 40-27 (about second-hand assets in residential property). The reduction is by the same proportion you reduce the balancing adjustment amount for the asset under section 40-291 .

25-47(5)    
Section 170 of the Income Tax Assessment Act 1936 does not prevent the amendment of an assessment for the purposes of giving effect to this section for an income year if:

(a) you discover the misappropriation after you lodged your *income tax return for the income year; and

(b) the amendment is made at any time during the period of 4 years starting immediately after you discover the misappropriation.