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  • Assets put to a tax-preferred use



    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

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    Division 250 of the Income Tax Assessment Act 1997 applies to the leasing of assets and other similar arrangements to tax-preferred end users (such as tax-exempt entities and non-residents).

    If Division 250 applies to an arrangement, then capital allowance deductions will be denied for the asset and the arrangement will be treated as a deemed loan that is taxed as a financial arrangement on a compounding accruals basis. Division 250 applies to all relevant arrangements where the tax-preferred use of an asset starts on or after 1 July 2007. However, Division 250 does not apply if the use occurs under a legally enforceable arrangement that was entered into before 1 July 2007.

    Division 250 also does not apply if you are a small business entity for the income year in which the arrangement period for the tax-preferred use of the asset starts, and you choose to deduct amounts under Subdivision 328-D (capital allowances for small business entities) for the asset for that income year. Division 250 also does not apply to certain relatively short-term and lower-value arrangements.

    When you have completed your Business and professional items schedule for individuals 2012, you will need to transfer:

    • your Net personal services income (PSI) amount (if any) from A item P1 on your schedule to A item 14 on page 13 of your tax return (supplementary section)
    • your Net income or loss from business amounts from Y and Z item P8 on your schedule to B and C (respectively) item 15 on page 14 of your tax return (supplementary section).
    Last modified: 04 Mar 2016QC 25649