INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 3 - Deductions  

Subdivision A - General  

SECTION 58   DEPRECIATION ROLL-OVER RELIEF FOR UNPOOLED PROPERTY WHERE CGT ROLL-OVER RELIEF ALLOWED UNDER SECTION 160ZZM, 160ZZMA, 160ZZN, 160ZZNA OR 160ZZO OR WHERE ELECTION FOR ROLL-OVER RELIEF MADE UNDER SECTION 59AA  

58(1)   Roll-over relief where CGT roll-over relief allowed.  

This section applies to the disposal of a unit of property by a taxpayer (in this section called the ``transferor'' ) to another taxpayer (in this section called the ``transferee'' ) if:

(a) either:

(i) in a case where the transferor is not a partnership - section 160ZZM , 160ZZMA , 160ZZN or 160ZZO applies to the disposal of the property by the transferor; or

(ii) if the transferor is a partnership - the property is partnership property of the partnership and section 160ZZNA applies to the corresponding disposal, by all of the partners in the partnership, of their interests in the property; and

(b) subject to subsection (7A), depreciation has been allowed, or is allowable, to the transferor in respect of the property.

58(2)   Roll-over relief where joint election made under section 59AA .  

This section also applies if a joint election for roll-over relief is made under section 59AA by both the transferor and the transferee referred to in that section in relation to the disposal of a unit of property.

58(3)   No balancing charges or deductions.  

Section 59 (which deals with balancing charges and deductions) does not apply to the disposal of the property by the transferor.

58(4)   Transferee to inherit certain characteristics from transferor.  

The provisions of this Act relating to depreciation apply as if:

(a) if the depreciation allowable to the transferor in respect of the property for the year of income in which the disposal occurred was calculated in accordance with paragraph 56(1)(a) :

(i) the transferee were not entitled to make an election under subsection 56(1AA) in relation to the property; and

(ii) the transferee had acquired the unit of property for a consideration equal to the depreciated value of the property immediately before the time of disposal (worked out on the assumption that subsection 60(2) had not been enacted); and

(b) if:

(i) the depreciation allowable to the transferor in respect of the property for the year of income in which the disposal occurred was calculated in accordance with paragraph 56(1)(b) ; or

(ii) both:

(A) the depreciation allowable to the transferor in respect of the property for the year of income in which the disposal occurred was calculated in accordance with section 57AK or 57AM ; and

(B) neither section 57AK nor 57AM applied to the transferee in respect of the property;

then:

(iii) the transferee had made an election under subsection 56(1AA) in relation to the property; and

(iv) the transferee had acquired the unit of property for a consideration equal to the cost of the unit to the transferor; and

(v) depreciation were not allowable to the transferee in respect of:

(A) so much of the cost of the property as was allowed or allowable to the transferor in respect of depreciation in relation to the property (worked out as if section 61 had not been enacted); or

(B) if there have been 2 or more prior successive applications of this section - so much of the cost of the property as was allowed or allowable to the prior successive transferors in respect of depreciation in relation to the property (worked out as if section 61 had not been enacted); and

(vi) the depreciated value of the property at a time when the property was owned by the transferee were worked out as if the total of:

(A) the amounts allowed or allowable to the transferor in respect of depreciation in relation to the property; and

(B) if there have been 2 or more prior successive applications of this section - the amounts allowed or allowable to the prior successive transferors in respect of depreciation in relation to the property;

were taken to have been amounts allowed or allowable to the transferee in respect of depreciation in relation to the property; and

(c) the effective life of the property worked out under section 54A in relation to the transferor were the effective life of the property worked out under that section in relation to the transferee; and

(d) if step 2 in section 55 applied to the transferor in relation to the property in relation to the year of income in which the disposal occurred - that step has effect, in relation to the transferee in relation to the property, as if the transferee had acquired the property before 1 July 1995.

58(5)   Section 57AK - special rules.  

If section 57AK (which deals with iron or steel production) applied to the transferor in relation to the property in relation to the year of income of the transferor in which the time of the disposal occurred, then:

(a) section 57AK has effect, in relation to the transferee and in relation to the property, as if:

(i) the conditions set out in paragraphs 57AK(1)(b) and (c) that were satisfied in relation to the transferor were satisfied in relation to the transferee; and

(ii) subsection 57AK(8) had not been enacted; and

(b) if section 57AK applies to the transferee in relation to the property - the provisions of this Act relating to depreciation apply as if:

(i) the transferee had acquired the unit of property for a consideration equal to the cost of the unit to the transferor; and

(ii) depreciation were not allowable to the transferee in respect of:

(A) so much of the cost of the property as was allowed or allowable to the transferor in respect of depreciation in relation to the property (worked out as if section 61 had not been enacted); or

(B) if there have been 2 or more prior successive applications of this section - so much of the cost of the property as was allowed or allowable to the prior successive transferors in respect of depreciation in relation to the property (worked out as if section 61 had not been enacted); and

(iii) the depreciated value of the property at a time when the property was owned by the transferee were worked out as if the total of:

(A) the amounts allowed or allowable to the transferor in respect of depreciation in relation to the property; and

(B) if there have been 2 or more prior successive applications of this section - the amounts allowed or allowable to the prior successive transferors in respect of depreciation in relation to the property;

were taken to have been amounts allowed or allowable to the transferee in respect of depreciation in relation to the property.

58(6)   Pro-rating of depreciation.  

Subsection 56(1A) (which deals with pro-rating) applies to the transferor and transferee in relation to the year of income in which the disposal occurred as if a reference to depreciation allowable in accordance with subsection 56(1) in respect of the property included a reference to depreciation allowable otherwise than in accordance with subsection 56(1) .

58(7)   Disposal by transferee where no roll-over relief - inheritance of deductions.  

If:

(a) after the disposal of the property to the transferee, the property is lost or destroyed or the transferee disposes of the property; and

(b) in the case of a disposal by the transferee - this section does not apply to the disposal;

then, for the purposes of the application of subsection 59(2) in relation to the loss, destruction or disposal, the total of:

(c) the amounts allowed or allowable to the transferor in respect of depreciation in relation to the property; and

(d) if there have been 2 or more prior successive applications of this section - the amounts allowed or allowable to the prior successive transferors in respect of depreciation in relation to the property;

are taken to have been amounts allowed or allowable to the transferee in respect of depreciation in relation to the property.

58(7A)   Second or subsequent application of section - paragraph (1)(b) does not apply.  

If, apart from this subsection, this section has applied to the disposal of the property to the transferee, then, in working out whether this section applies to a subsequent disposal of the property by:

(a) the transferee; or

(b) one or more subsequent successive transferees;

this section has effect as if paragraph (1)(b) (which deals with deductions for depreciation) had not been enacted.

58(8)   CGT roll-over relief applies to motor vehicles.  

For the purposes of this section, in addition to the effect that sections 160ZZM , 160ZZMA , 160ZZN , 160ZZNA and 160ZZO have apart from this subsection, those sections also have the effect that they would have if a reference in those sections to an asset included a reference to a motor vehicle of a kind covered by paragraph 82AF(2)(a) .