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 45 - Disposal of leases and leased plant

SECTION 45-40 Application of Division to plant formerly owned by exempt entities

45-40(1)
There are the consequences set out in this table for a transition entity that disposes of the plant, interest in plant or interest (or part) in a partnership to an entity specified in subsection (3) .

Consequences for transition entities
Item	In this situation:	There are these consequences:
1	The entity chooses, under section 58-20, that depreciation deductions and balancing adjustments are to be calculated by reference to the notional written down value of plant	(a)	section 45-5 has effect as if paragraph 45-5(2)(b) were omitted and replaced by paragraph 58-85(8)(a); and
		(b)	section 45-10 has effect as if paragraph 45-10(2)(b) operated on that part of the amount worked out under paragraph 58-85(8)(a) that has been or would be reflected in the entity's interest in the partnership net income or partnership loss if that amount were an amount deducted for depreciation of the plant.
.
2	The entity chooses, under section 58-20, that depreciation deductions and balancing adjustments are to be calculated by reference to the undeducted pre-existing audited book value of plant	(a)	section 45-5 has effect as if paragraph 45-5(2)(b) were omitted and replaced by paragraph 58-145(8)(a); and
		(b)	section 45-10 has effect as if paragraph 45-10(2)(b) operated on that part of the amount worked out under paragraph 58-145(8)(a) that has been or would be reflected in the entity's interest in the partnership net income or partnership loss if that amount were an amount deducted for depreciation of the plant.

45-40(2)
There are the consequences set out in this table for an entity that:

(a) acquired the plant from a tax exempt vendor in connection with the acquisition of a business; and

(b) disposes of the plant, interest in plant or interest (or part) in a partnership to an entity specified in subsection (3) .

Consequences for transition entities
Item	In this situation:	There are these consequences:
1	The entity chooses, under section 58-155, that depreciation deductions and balancing adjustments are to be calculated by reference to the notional written down value of plant	(a)	section 45-5 has effect as if paragraph 45-5(2)(b) were omitted and replaced by paragraph 58-215(3)(a); and
		(b)	section 45-10 has effect as if paragraph 45-10(2)(b) operated on that part of the amount worked out under paragraph 58-215(3)(a) that has been or would be reflected in the entity's interest in the partnership net income or partnership loss if that amount were an amount deducted for depreciation of the plant.
.
2	The entity chooses, under section 58-155, that depreciation deductions and balancing adjustments are to be calculated by reference to the undeducted pre-existing audited book value of plant	(a)	section 45-5 has effect as if paragraph 45-5(2)(b) were omitted and replaced by paragraph 58-270(3)(a); and
		(b)	section 45-10 has effect as if paragraph 45-10(2)(b) operated on that part of the amount worked out under paragraph 58-270(3)(a) that has been or would be reflected in the entity's interest in the partnership net income or partnership loss if that amount were an amount deducted for depreciation of the plant.

45-40(3)
The entities are:

(a) an exempt entity; or

(b) the trustee of a complying superannuation fund; or

(c) the trustee of a complying approved deposit fund; or

(d) the trustee of a pooled superannuation trust; or

(e) an entity that is not an Australian resident; or

(f) an entity that is a State/Territory body for the purposes of Division 1AB of Part III of the Income Tax Assessment Act 1936 and whose income is exempt under that Division.

Apportionment

45-40(4)
If the entity concerned disposed of an interest in the plant rather than the plant (for a paragraph 45-5(2)(b) case), instead of the amount worked out under the table in subsection (1) or (2) , the entity uses so much of that amount as is attributable to that interest.

45-40(5)
If the entity concerned disposed of part of its interest in the plant rather than all of it (for a paragraph 45-10(2)(b) case), instead of the amount worked out under the table in subsection (1) or (2) , the entity uses so much of that amount as is attributable to that part of that interest.

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