Income Tax Assessment Act 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

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

Division 27 - Effect of input tax credits etc. on deductions  

Subdivision 27-B - Effect of input tax credits etc. on capital allowances  

SECTION 27-100   Pooling  

27-100(1)    
This section contains special rules for expenditure (the pooled expenditure ) incurred by an entity:

(a) on a ^* depreciating asset allocated to a low-value pool; or

(b) on a depreciating asset allocated to a pool under Division 328 for or in an income year; or

(c) on ^* in-house software if the expenditure on the software is allocated to a software development pool; and

(d) on ^* project amounts if the amounts are allocated to a project pool.

Reduction to pools etc.

27-100(2)    
There is a reduction under subsection (3) or (5) if:

(a) the pooled expenditure relates directly or indirectly to a ^* creditable acquisition or ^* creditable importation; and

(b) the entity is or becomes entitled to an ^* input tax credit in an income year (the credit year ) for the acquisition or importation and the credit year occurs after the income year in which the acquisition or importation occurred.

27-100(2A)    
There is a reduction under subsection (4) if:

(a) the pooled expenditure relates directly or indirectly to a ^* creditable acquisition or ^* creditable importation; and

(b) the entity is or becomes entitled to an ^* input tax credit in an income year (the credit year ) for the acquisition or importation.

Reduced cost of assets allocated to a pool

27-100(2B)    
A ^* depreciating asset's ^* cost is reduced if:

(a) an entity's acquisition or importation of the asset constitutes a ^* creditable acquisition or ^* creditable importation; and

(b) the entity is or becomes entitled to an ^* input tax credit for the acquisition or importation and the income year in which the acquisition or importation occurred is the same as the one in which the input tax credit arose; and

(c) the asset is allocated to a low-value pool or a pool under Division 328 for or in that year.

The reduction is the amount of the input tax credit.

Low-value pools

27-100(3)    
For a low-value pool, the ^* closing pool balance of the pool for:

(a) if the credit year is later than the first income year for which ^* depreciating assets were allocated to the pool - the income year before the credit year; or

(b) if the credit year is the first income year for which ^* depreciating assets were allocated to the pool - the credit year;

is reduced by an amount equal to the input tax credit.

Software development pools and project pools

27-100(4)    
For a software development pool or a project pool, the expenditure in the pool for the credit year, or the ^* pool value for the credit year, is reduced by an amount equal to the ^* input tax credit.

Small business pools

27-100(5)    
For a pool under Division 328 , the ^* opening pool balance of the pool for the credit year is reduced by an amount equal to the input tax credit.

No reduction if market value

27-100(5A)    
However, there is no reduction to the ^* cost of a ^* depreciating asset if its cost is modified under Division 40 to be its ^* market value.

Second element of cost

27-100(6)    
There is a reduction under subsection (7) if:

(a) the entity incurs expenditure in an income year (also the credit year ) that is included in the second element of the ^* cost of a ^* depreciating asset allocated to a low-value pool or a pool under Division 328 for or in the credit year; and

(b) the entity is or becomes entitled, after the credit year, to an ^* input tax credit for the expenditure.

27-100(7)    
An amount equal to the amount of the ^* input tax credit is applied in reduction of:

(a) for a low-value pool:

(i) if the credit year is later than the first income year for which ^* depreciating assets were allocated to the pool - the ^* closing pool balance of the pool for the income year before the credit year; or

(ii) if the credit year is the first income year for which ^* depreciating assets were allocated to the pool - the ^* closing pool balance of the pool for the credit year; or

(b) for a pool under Division 328 - the ^* opening pool balance of the pool for the credit year.

27-100(7A)    
There is a reduction to an amount of expenditure included in the second element of the ^* cost of a ^* depreciating asset if:

(a) the asset is allocated to a low-value pool or a pool under Division 328 for or in the income year in which the expenditure was incurred; and

(b) the entity that incurred the expenditure is or becomes entitled to an ^* input tax credit for the expenditure; and

(c) the entitlement arises in the income year in which the expenditure was incurred.

The reduction is the amount of the input tax credit.

Increasing adjustments

27-100(8)    
There is an increase under subsection (9) if the entity has an ^* increasing adjustment (except one that arises under Division 129 or 132 of the ^* GST Act) in an income year (the adjustment year ) that relates directly or indirectly to a ^* creditable acquisition or ^* creditable importation to which the pooled expenditure relates.

Note:

For an increasing adjustment that arises under Division 129 or 132 of the GST Act, see section 27-92 .

27-100(9)    
An amount equal to the amount of that ^* increasing adjustment is added to:

(a) for a low-value pool:

(i) if the adjustment year is later than the first income year for which ^* depreciating assets were allocated to the pool - the ^* closing pool balance of the pool for the income year before the adjustment year; or

(ii) if the adjustment year is the first income year for which ^* depreciating assets were allocated to the pool - the ^* closing pool balance of the pool for the adjustment year; or

(b) for a pool under Division 328 - the ^* opening pool balance of the pool for the adjustment year; or

(c) for ^* in-house software - the amount of expenditure allocated to the software development pool for the adjustment year; or

(d) for a project pool - the ^* pool value for the adjustment year.

Decreasing adjustments

27-100(10)    
There is a decrease under subsection (11) if the entity has a ^* decreasing adjustment (except one that arises under Division 129 or 132 of the ^* GST Act) in an income year (also the adjustment year ) that relates directly or indirectly to a ^* creditable acquisition or ^* creditable importation to which the pooled expenditure relates.

Note:

For a decreasing adjustment that arises under Division 129 or 132 of the GST Act, see section 27-87 .

27-100(11)    
An amount equal to the amount of the ^* decreasing adjustment is applied in reduction of:

(a) for a low-value pool:

(i) if the adjustment year is later than the first income year for which ^* depreciating assets were allocated to the pool - the ^* closing pool balance of the pool for the income year before the adjustment year; or

(ii) if the adjustment year is the first income year for which ^* depreciating assets were allocated to the pool - the ^* closing pool balance of the pool for the adjustment year; or

(b) for a pool under Division 328 - the ^* opening pool balance of the pool for the adjustment year; or

(c) for ^* in-house software - the amount of expenditure allocated to the software development pool for the adjustment year; or

(d) for a project pool - the ^* pool value for the adjustment year.

27-100(12)    
If the amount available for reduction under subsection (11) is more than the amount referred to in paragraph (11)(a), (b), (c) or (d) (whichever is applicable), the excess is included in the entity's assessable income unless the entity is an ^* exempt entity.