Income Tax (Transitional Provisions) Act 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

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

Division 40 - Capital allowances  

Subdivision 40-BB - Temporary full expensing of depreciating assets  

SECTION 40-170   Full expensing of eligible second element of cost  

40-170(1)    
For the purposes of Division 40 of the Income Tax Assessment Act 1997 , the decline in value of a depreciating asset you hold for an income year (the current year ) is the amount worked out under this section if:

(a)    either:

(i) you start to use the asset, or have it installed ready for use, for a taxable purpose in the current year; or

(ii) you started to use the asset, or have it installed ready for use, for a taxable purpose in an earlier income year; and

(b)    you are covered by section 40-150 for the asset; and

(c)    

you are covered for the current year by any of the following:

(i) section 40-155 (about businesses with turnover under $5 billion);

(ii) section 40-157 (about corporate tax entities with income under $5 billion); and

(d)    the eligible second element worked out under section 40-175 for the asset for the year is greater than nil; and

(e)    no balancing adjustment event happens to the asset in the current year; and

(f)    

you have not made a choice under section 40-190 in relation to the current year.

Exclusions

40-170(1A)    

However, this section does not apply if:

(a)    section 40-157 covers you for the current year (but section 40-155 does not); and

(b)    an exclusion applies to you and the asset for the current year under section 40-167 (about exclusions for corporate tax entities with income under $5 billion).

Amount of the decline in value

40-170(2)    
The decline in value of the asset for the current year is:

(a)    if the asset ' s decline in value for the year would, apart from section 40-145 , be worked out under section 40-82 of the Income Tax Assessment Act 1997 - the amount worked out under subsection (3); or

(b)    if the asset ' s decline in value for the year would, apart from section 40-145 , be worked out under Subdivision 40-BA of this Act - the amount worked out under subsection (4); or

(c)    otherwise - the amount worked out under subsection (5).

Assets affected by section 40-82 of the Income Tax Assessment Act 1997 (about assets costing less than $150,000, medium sized businesses)

40-170(3)    
If this subsection applies, the amount for the current year is the sum of:

(a)    the amount that would be the asset ' s decline in value for the year under section 40-82 of the Income Tax Assessment Act 1997 , assuming the reference in subparagraph 40-82(3A)(b)(ii) of that Act to 31 December 2020 were instead a reference to the 2020 budget time; and

(b)    the eligible second element worked out under section 40-175 of this Act for the asset for the year.

Assets affected by Subdivision 40-BA (backing business investment)

40-170(4)    
If this subsection applies, the amount for the current year is the sum of:

(a)    the amount that would be worked out under paragraph 40-130(2)(a) or (4)(a) (whichever is applicable) for the year, assuming the references in paragraphs 40-130(2)(a) and (4)(a) to 30 June 2021 were instead references to the 2020 budget time; and

(b)    the eligible second element worked out under section 40-175 for the asset for the year; and

(c)    the amount that would be worked out under paragraph 40-130(2)(b) or (4)(b) (whichever is applicable) for the year, assuming the references in paragraphs 40-130(2)(b) and (4)(b) to " the amount worked out under paragraph (a) " were instead references to " the amounts worked out under paragraphs 40-170(4)(a) and (b) " .

Other assets

40-170(5)    
If this subsection applies, the amount for the current year is the sum of:

(a)    the amount that would be the asset ' s decline in value for the year under Division 40 of the Income Tax Assessment Act 1997 , disregarding any amounts included in the eligible second element worked out under section 40-175 of this Act for the asset for the year; and

(b)    the eligible second element worked out under section 40-175 for the asset for the year.