Involuntary disposal of a depreciating asset
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An involuntary disposal occurs if a depreciating asset is:
- lost or destroyed
- compulsorily acquired by an Australian government agency or
- disposed of to an Australian government agency
after compulsory negotiations after 11.45 am (by legal time in the ACT) on 21 September 1999.
You may offset an assessable balancing adjustment amount arising from an involuntary disposal against the cost or the opening adjustable value plus second element costs of one or more replacement assets. You must incur the expenditure on the replacement asset, or start to hold it, no earlier than one year before the involuntary disposal and no later than one year after the end of the income year in which the disposal occurred. The Commissioner can agree to extend the time limit.
To offset the assessable balancing adjustment amount, the replacement asset must be wholly used for a taxable purpose and you must be able to deduct an amount for it.
Last modified: 01 Jun 2005QC 27399