Tax Laws Amendment (Small Business) Act 2007 (80 of 2007)

Schedule 3   STS taxpayers

Part 1   Main amendments

Income Tax Assessment Act 1997

45   Subsection 328-205(4) (example)

Repeal the example, substitute:

Example: When Bria’s van was allocated to her general small business pool for the 2007-08 income year, she estimated that it would be used 50% for deliveries in her florist business. Due to increasing deliveries, Bria estimates the van’s business use to be 70% for the 2008-09 year, and 90% for the 2009-10 year. She makes an adjustment under section 328-225 for both those years.

Bria sells the van for $3,000 at the start of the 2011-12 income year. She must now average the business use estimates for the van for the year it was allocated to the pool and the next 3 years to work out the taxable purpose proportion of its termination value. The average is worked out as follows:

· 50% (original estimate); plus

· 70% (2008-09 estimate); plus

· 90% (2009-10 estimate); plus

· 90% (no change on previous year);

The taxable purpose proportion of the van’s termination value is, therefore: