Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)Chapter 6 - Technical amendments
Overview
6.1 Schedule 6 of the Bill will amend Division 42 of the Income Tax Assessment Act 1997 (the 1997 Act) to make minor technical corrections to depreciation rules relating to lessors' fixtures.
Background to legislation
6.2 Provisions from the Income Tax Assessment Act 1936 (the 1936 Act) which give lessors of plant entitlement to taxation depreciation allowances in respect of leased chattels that become a fixture on another's land were translated into the 1997 Act by Act No 174 of 1997.
6.3 Minor technical amendments are required to some of those provisions of the 1997 Act.
6.4 The amendments will apply to assessments for the 1997-98 income year and later income years.
Explanation of the amendments
6.5 The first amendment corrects a duplication of numbers in the items in section 42-65 of the 1997 Act which specifies how to work out the cost of plant. The second item 12 in the table is being re-numbered item 12A.
6.6 Table Item 10B in section 42-205 (which specifies how to work out the termination value when plant is disposed of) makes reference to the termination value of 'disposals' under paragraphs 42-313(a), (b) and (c). The paragraphs specify certain circumstances where the lessor ceases to be treated as the quasi-owner of leased fixtures. In order to accurately link item 10B to paragraphs 42-313(a), (b) and (c), the reference to 'disposal' in Item 10B is being replaced with a reference to the 'event' mentioned in those paragraphs.
Termination Value of Plant - Part disposal
6.7 A new item (item 10D) is being inserted into the table in section 42-205 which will specify a termination value where there is a partial disposal of a lessor's interest in leased fixtures. This is to clarify the position in relation to a partial disposal of quasi-ownership of lessors fixtures. It is not clear which of the existing table items would apply to a partial disposal of quasi-ownership.
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