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 27-80   Cost or opening adjustable value of depreciating assets reduced for input tax credits  

27-80(1)    
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

(c) the entity can deduct amounts for the asset under Division 40 or 328 .

The reduction is the amount of the input tax credit.

27-80(2)    
A ^* depreciating asset ' s ^* cost is also reduced if:

(a) the entity that ^* holds the asset incurs expenditure that is included in the second element of the asset ' s cost for the income year in which the asset ' s ^* start time occurs; and

(b) the entity is or becomes entitled to an ^* input tax credit for the ^* creditable acquisition or ^* creditable importation to which the expenditure relates; and

(c) the entity can deduct amounts for the asset under Division 40 or 328 .

The reduction is the amount of the input tax credit.

27-80(3)    
However, subsections (1) and (2) do not apply if the ^* cost of the ^* depreciating asset is modified under Division 40 to be its ^* market value.

27-80(3A)    

A ^* depreciating asset ' s ^* opening adjustable value for an income year and its ^* 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 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; and

(c) the income year is after the one in which the asset ' s ^* start time occurs; and

(d) the entity can deduct amounts for the asset under Division 40 or 328 .

The reduction is the amount of the input tax credit.

27-80(4)    

A ^* depreciating asset ' s ^* opening adjustable value for an income year and its ^* cost is reduced if:

(a) the entity that ^* holds the asset incurs expenditure that is included in the second element of the asset ' s cost for that income year; and

(b) that income year is after the one in which the asset ' s ^* start time occurs; and

(c) the entity is or becomes entitled to an ^* input tax credit for the ^* creditable acquisition or ^* creditable importation to which the expenditure relates for the income year in which the expenditure was incurred; and

(d) the entity can deduct amounts for the asset under Division 40 or 328 .

The reduction is the amount of the input tax credit.

27-80(5)    

If the reduction under subsection (2), (3A) or (4) is more than:

(a) for a subsection (2) case - the ^* depreciating asset ' s ^* cost; or

(b) for a subsection (3A) or (4) case - the depreciating asset ' s ^* opening adjustable value;

the excess is included in the entity ' s assessable income unless the entity is an ^* exempt entity.

Exception: pooling

27-80(6)    
This section does not apply to:

(a) a depreciating asset allocated to a low-value pool or a pool under Division 328 for or in the ^* current year; or

(b) ^* in-house software if expenditure on the software is allocated to a software development pool for the current year; or

(c) a project pool.