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-B - Core provisions  

SECTION 40-40   Transport expenditure  

40-40(1)    
This section applies to you if you have deducted or can deduct an amount for transport capital expenditure in respect of a transport facility under Subdivision 330-H of the former Act, or you could have deducted an amount for the expenditure under that Subdivision if you had started to use the facility for a qualifying purpose before 1 July 2001.

40-40(2)    
Division 40 of the new Act applies to the expenditure as if it were a depreciating asset (the notional asset ) you hold on this basis:

(a) it has an opening adjustable value at 1 July 2001 equal to the total amount of transport capital expenditure under the former Act less the amounts you have deducted or can deduct for that expenditure under the former Act; and

(b) it has a cost equal to the total amount of transport capital expenditure under the former Act; and

(c) in applying the formula in section 40-75 of the new Act for your income year in which 1 July 2001 occurs - you use the adjustments in subsection 40-75(3) of the new Act; and

(ca) it is taken to have been used for a taxable purpose at the start of 1 July 2001; and

(d) it has an effective life at the start of 1 July 2001 equal to the years remaining for the expenditure under section 330-395 of the former Act; and

(e) you must use the prime cost method.

Note:

There are special rules for entities that have substituted accounting periods: see section 40-65 .

40-40(3)    
Sections 40-95 and 40-110 of the new Act do not apply to the expenditure.

40-40(4)    
If either:

(a) both of these subparagraphs apply:

(i) any of the transport capital expenditure referred to in subsection (1) relates to a depreciating asset (the real asset );

(ii) in an income year (the cessation year ) you stop holding the real asset, or stop using it for a taxable purpose; or

(b) both of these subparagraphs apply:

(i) any of the transport capital expenditure referred to in subsection (1) relates to property that is not a depreciating asset (the other property );

(ii) in the cessation year, the other property is disposed of, lost or destroyed, or you stop using it for a taxable purpose;

there is an additional decline in value of the notional asset for the cessation year equal to so much of the notional asset's adjustable value as relates to the real asset or the other property and has not been taken into account in working out the amount of a balancing adjustment in relation to the real asset.

40-40(5)    
If the other property is disposed of, lost or destroyed, or you stop using it for a taxable purpose, you must include in your assessable income:

(a) if the other property is sold for a price specific to that property - that price, less the expenses of the sale (to the extent the expenses are reasonably attributable to selling that particular property); or

(b) if the other property is sold with additional property without a specific price being allocated to it - the part of the total sale price, less the reasonably attributable expenses of the sale, that is reasonably attributable to selling the other property; or

(c) if the other property is lost or destroyed - the amount or value received or receivable under an insurance policy or otherwise for the loss or destruction; or

(d) if you own the other property and you stop using it for a taxable purpose - its market value at that time; or

(e) if you do not own the property and you stop using it for a taxable purpose - a reasonable amount.

However, the amount included is reduced to the extent (if any) that it is also included under subsection 40-830(6) of the new Act.

40-40(6)    

If section 40-115 of the new Act applies, or section 40-125 of the new Act would, apart from this subsection, apply, to the real asset referred to in subsection (4) of this section, then:

(a) if the real asset is split into 2 or more depreciating assets and you stop holding, or stop using for a taxable purpose, one or more but not all of the assets into which it is split - subsection (4) does not apply to that asset or assets into which it is split that you continue to hold and continue to use for a taxable purpose; or

(b) if the real asset is merged into another depreciating asset - section 40-125 does not apply to the asset into which it is merged while you continue to hold it.