Tax Laws Amendment (2004 Measures No. 2) Act 2004 (83 of 2004)

Schedule 1   Life insurance companies

Part 2   Amendments commencing on 30 June 2001

Income Tax Assessment Act 1997

87   Subsection 320-200(2A)

Repeal the subsection, substitute:

(2A) Without limiting subsection (2), where the asset transferred is a *depreciating asset, Division 40 has effect for the company as if:

(a) in relation to the sale of the asset that is taken to have occurred under paragraph (2)(c):

(i) the sale were a *balancing adjustment event; and

(ii) the *termination value of the asset for that event were equal to the consideration for the sale under that paragraph; and

(iii) the company had stopped *holding the asset at the time of the sale; and

(b) in relation to the purchase of the asset that is taken to have occurred under paragraph (2)(d):

(i) the company had only begun to hold the asset after the purchase; and

(ii) the first element of the asset's *cost were equal to the consideration for the purchase under that paragraph; and

(iii) the company had acquired the asset from an *associate of the company.

Note: This means that, amongst other things, as a result of the transfer:

· the asset's cost for the purposes of working out a deduction under Division 40 is reset; and

· the company's assessable income might be adjusted under section 40-285.