Income Tax Assessment Act 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION

PART 2-10 - CAPITAL ALLOWANCES: RULES ABOUT DEDUCTIBILITY OF CAPITAL EXPENDITURE

Division 40 - Capital allowances

Commissioner ' s Remedial Power

Note: A Commissioner ' s Remedial Power (CRP 2017/2) is relevant to this part of the tax law. Taxation Administration (Remedial Power - Small Business Restructure Roll-over) Determination 2017 (F2017L01687) modifies the operation of s 40-340 of the Income Tax Assessment Act 1997 and any other provisions of a taxation law whose operation is affected by the modified operation of s 40-340 in relation to an asset transferred under a small business restructure roll-over (item 8 of the table in s 40-340(1) ).

The operation of the relevant provisions is modified as follows:

If s 40-340 of ITAA 1997 provides for rollover relief in relation to a disposal of a depreciating asset because the condition in item 8 of the table in s 40-340(1) of ITAA 1997 is satisfied in relation to the asset, that section has effect as if it also provided that the disposal of the asset has no direct consequences under the income tax law (other than Div 40 of ITAA 1997).

The modification applies in respect of transfers on or after 8 May 2018.

An entity must treat a modification as not applying to it or any other entity if the modification would produce a less favourable result for it. The Commissioner is empowered by s 370-5 of Sch 1 to the Taxation Administration Act 1953 to make modifications, by legislative instrument, to ensure the law is administered to achieve its intended purpose or object.

Subdivision 40-E - Low-value and software development pools

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Operative provisions

SECTION 40-440 How you work out the decline in value of assets in low-value pools

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40-440(1)
You work out the decline in value of ^* depreciating assets in a low-value pool for an income year in this way:

Step 1.

Work out the amount obtained by taking 18 ¾ % of the taxable use percentage of the ^* cost of each ^* low-cost asset you allocated to the pool for that year. Add those amounts.

Step 2.

Add to the step 1 amount 18 ¾ % of the taxable use percentage of any amounts included in the second element of the ^* cost for that year of:

(a) assets allocated to the pool for an earlier income year; and

(b) ^* low-value assets allocated to the pool for the ^* current year.

Step 3.

Add to the step 2 amount 37 ½ % of the sum of:

(a) the ^* closing pool balance for the previous income year; and

(b) the taxable use percentage of the ^* opening adjustable values of ^* low-value assets, at the start of the income year, that you allocated to the pool for that year.

Step 4.

The result is the decline in value of the ^* depreciating assets in the pool.

40-440(2)
The closing pool balance of a low-value pool for an income year is the sum of:

(a) the ^* closing pool balance of the pool for the previous income year; and

(b) the taxable use percentage of the ^* costs of ^* low-cost assets you allocated to the pool for that year; and

(c) the taxable use percentage of the ^* opening adjustable values of any ^* low-value assets you allocated to the pool for that year as at the start of that year; and

(d) the taxable use percentage of any amounts included in the second element of the cost for the income year of:

(i) assets allocated to the pool for an earlier income year; and

(ii) low-value assets allocated to the pool for the ^* current year;

less the decline in value of the ^* depreciating assets in the pool worked out under subsection (1).

Note:

The closing pool balance may be reduced under section 40-445 if a balancing adjustment event happens.

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