Treasury Laws Amendment (Housing Tax Integrity) Act 2017 (126 of 2017)

Schedule 2   Limiting depreciation deductions for assets in residential premises

Income Tax Assessment Act 1997

5   After section 40-290

Insert:

40-291 Reduction for second-hand assets used in residential property

(1) In addition to section 40-290, you must reduce the amount (the balancing adjustment amount ) included in your assessable income, or that you can deduct, under section 40-285 for a *depreciating asset if your deductions for the asset have been reduced under section 40-27.

(2) The reduction is the following, as increased under subsection (3) if applicable:

where:

sum of section 40-27 reductions is the sum of:

(a) the reductions in your deductions for the asset under section 40-27; and

(b) if there has been roll-over relief for the asset under section 40-340 - the reductions in deductions for the asset for the transferor or an earlier successive transferor under section 40-27; and

(c) if you *hold the asset as the *legal personal representative of an individual - the reductions in deductions for the asset for the individual under section 40-27.

total decline is the sum of:

(a) the decline in value of the *depreciating asset since you started to *hold it; and

(b) if there has been roll-over relief for the asset under section 40-340 - the decline in value of the asset for the transferor or an earlier successive transferor; and

(c) if you hold the asset as the *legal personal representative of an individual - the decline in value of the asset for the individual.

(3) If:

(a) the *cost (for you) of the asset (the current asset ) was worked out under section 40-205 (Cost of a split depreciating asset) or 40-210 (Cost of merged depreciating assets); and

(b) you used the *depreciating asset from which the current asset was split, or a depreciating asset that was merged into the current asset, or had it *installed ready for use, for the purpose to which paragraphs 40-27(2)(a) and (b) relate;

the reduction includes an increase equal to such amount as is reasonable having regard to the extent of the use referred to in paragraph (b) of this subsection.