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  • Rollover relief



    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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    If rollover relief is available under the UCA rules, no balancing adjustment amount arises when a balancing adjustment event occurs for a depreciating asset. In some cases, rollover relief is automatic - for example, transfers pursuant to a court order following a marriage breakdown.

    In some cases, rollover relief must be chosen. If the event arises from a change in the holding of, or in interests in, a partnership asset such as a variation in the constitution of a partnership or in a partnership interest, the transferor and the transferee must jointly choose the rollover relief.

    When rollover relief applies, the transferee of the depreciating asset can claim deductions for the asset's decline in value as if there had been no change in holding.

    The transferee must use the same method that the transferor used to work out the decline in value of the asset.

    If the transferor used the diminishing value method, the transferee must also use the same effective life that the transferor was using.

    If the transferor used the prime cost method, the transferee must replace the asset's effective life in the prime cost formula with the asset's remaining effective life - that is, any period of the asset's effective life that is yet to elapse when the transferor stopped holding the asset.

    The first element of cost for the transferee is the adjustable value of the asset when it was held by the transferor just before the balancing adjustment event occurred.

    There are specific record-keeping requirements for rollover relief - see Record keeping for rollover relief.

    For the 2007-08 income year and later years the roll-over relief available under the UCA rules has been extended to small business entities that choose to claim their capital allowance deductions under the simplified depreciation rules - see Small business entities.

    Last modified: 06 Oct 2009QC 21774