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  • Involuntary disposal of a depreciating asset



    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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    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 negotiations after 11.45am (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 of one or more replacement assets. If you offset an amount against the cost of a replacement asset for an income year after the one in which the replacement asset's start time occurs, you must also reduce the sum of its opening adjustable value plus any second elements of its cost for that later year.

    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 that 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, or installed ready for use, by you for a taxable purpose at the end of the income year in which you incurred the expenditure on the asset or you started to hold it and you must be able to deduct an amount for it.

    Last modified: 08 Apr 2020QC 27597