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 40-160   Full expensing of first and second element of cost for post-2020 budget assets  

40-160(1)    
For the purposes of Division 40 of the Income Tax Assessment Act 1997 , the decline in value of a depreciating asset you hold for an income year (the current year ) is the amount worked out under subsection (3) if:

(a)    you start to hold the asset at or after the 2020 budget time; and

(b)    you start to use the asset, or have it installed ready for use, for a taxable purpose in the current year; and

(c)    you are covered by section 40-150 for the asset; and

(d)    

you are covered for the current year by any of the following:

(i) section 40-155 (about businesses with turnover under $5 billion);

(ii) section 40-157 (about corporate tax entities with income under $5 billion); and

(e)    no balancing adjustment event happens to the asset in the current year; and

(f)    

you have not made a choice under section 40-190 in relation to the current year.

Exclusions

40-160(2)    

However, this section does not apply if:

(a)    where section 40-155 covers you for the current year (regardless whether section 40-157 also covers you for the current year) - an exclusion applies to you and the asset for the current year under section 40-165 (about exclusions for businesses with turnover of $50 million or more); or

(b)    where section 40-157 covers you for the current year (but section 40-155 does not):

(i) an exclusion applies to you and the asset for the current year under section 40-165 ; or

(ii) an exclusion applies to you and the asset for the current year under section 40-167 (about exclusions for corporate tax entities with income under $5 billion).

Amount of the decline in value

40-160(3)    
The decline in value for the current year is:

(a)    

if the asset ' s start time occurs in the current year - the asset ' s cost as at the end of the current year, disregarding any amount included in the asset ' s cost after 30 June 2023; or

(b)    

if the asset ' s start time occurred in an earlier year - the sum of its opening adjustable value for the current year and any amount included in the second element of its cost for the current year, disregarding any amount included in the asset ' s cost after 30 June 2023.

Note 1:

The asset ' s start time is when you first use it, or have it installed ready for use, for any purpose (including a non-taxable purpose): see subsection 40-60(2) of the Income Tax Assessment Act 1997 .

Note 2:

A case covered by paragraph (b) is where you start to hold the asset in the period 6 October 2020 to 30 June 2021 and use it for only non-taxable purposes in that period, then first use it for a taxable purpose in the period 1 July 2021 to 30 June 2022.