Income Tax Assessment Act 1997
View history note
Hide history noteNote: A Commissioner ' s Remedial Power (CRP 2017/2) is relevant to this part of the tax law. Taxation Administration (Remedial Power - Small Business Restructure Roll-over) Determination 2017 (F2017L01687) modifies the operation of s 40-340 of the Income Tax Assessment Act 1997 and any other provisions of a taxation law whose operation is affected by the modified operation of s 40-340 in relation to an asset transferred under a small business restructure roll-over (item 8 of the table in s 40-340(1) ).
The operation of the relevant provisions is modified as follows:
If s 40-340 of ITAA 1997 provides for rollover relief in relation to a disposal of a depreciating asset because the condition in item 8 of the table in s 40-340(1) of ITAA 1997 is satisfied in relation to the asset, that section has effect as if it also provided that the disposal of the asset has no direct consequences under the income tax law (other than Div 40 of ITAA 1997).
The modification applies in respect of transfers on or after 8 May 2018.
An entity must treat a modification as not applying to it or any other entity if the modification would produce a less favourable result for it. The Commissioner is empowered by s 370-5 of Sch 1 to the Taxation Administration Act 1953 to make modifications, by legislative instrument, to ensure the law is administered to achieve its intended purpose or object.
SECTION 40-285 Balancing adjustments 40-285(1)
An amount is included in your assessable income if:
(a) a * balancing adjustment event occurs for a * depreciating asset you * held and:
(i) whose decline in value you worked out under Subdivision 40-B ; or
(ii) whose decline in value you would have worked out under that Subdivision if you had used the asset; and
(b) the asset ' s * termination value is more than its * adjustable value just before the event occurred.
The amount included is the difference between those amounts, and it is included for the income year in which the balancing adjustment event occurred.
Note 1:
The most common balancing adjustment event is where you sell the depreciating asset.
Note 2:
There is a different calculation if you had used different car expense methods for a car: see section 40-370 .
Note 3:
There is a modification to the calculation in the case of misappropriation by your employee or agent: see section 25-47 .
40-285(2)
You can deduct an amount if:
(a) a * balancing adjustment event occurs for a * depreciating asset you * held and:
(i) whose decline in value you worked out under Subdivision 40-B ; or
(ii) whose decline in value you would have worked out under that Subdivision if you had used the asset; and
(b) the asset ' s * termination value is less than its * adjustable value just before the event occurred.
The amount you can deduct is the difference between those amounts, and you can deduct it for the income year in which the balancing adjustment event occurred.
Note 1:
There is a different calculation if you had used different car expense methods for a car: see section 40-370 .
Note 2:
The timing of a deduction allowed under this subsection is determined under Subdivision 170-D where that Subdivision applies to the balancing adjustment event.
Note 3:
There is a modification to the calculation in the case of misappropriation by your employee or agent: see section 25-47 .
40-285(3)
The * adjustable value of a * depreciating asset you * hold after this section applies to it is then zero.
40-285(4)
However, subsection (3) does not apply to a * depreciating asset for which you have a * cost under item 3, 4 or 14 of the table in subsection 40-180(2) . Instead, the asset ' s * opening adjustable value for the income year (the later year ) after the one in which the * balancing adjustment event occurred is that cost plus any amounts included in the second element of that cost after the event occurred and before the start of the later year.
Note:
Those items deal with a case where a balancing adjustment event happens even though you still hold the asset in question.
40-285(5)
Despite subsection (1), an amount included in your assessable income under that subsection is included for the second income year after the income year in which the *balancing adjustment event occurs if:
(a) the *depreciating asset is a vessel; and
(b) you have a certificate for the vessel under Part 2 of the Shipping Reform (Tax Incentives) Act 2012 that:
(i) applies to the day that the balancing adjustment event occurs; and
(ii) is not a *shipping exempt income certificate.
Note:
An amount will not be included in your assessable income in relation to the balancing adjustment event if you choose roll-over relief under section 40-362 .
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