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  • Balancing adjustment offsets



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    Balancing adjustment offset for plant disposed of at or before 11.45am on 21 September 1999

    Where you dispose of depreciable plant at or before 11.45am (by legal time in the ACT) on 21 September 1999 for more than its depreciated value you can elect to offset any assessable balancing adjustment against:

    • the cost of any replacement or other plant acquired, or
    • the written down value of other depreciated items of plant.

    Balancing adjustment offset for plant disposed of after 11.45am on 21 September 1999

    For disposal of plant after 11.45am (by legal time in the ACT) on 21 September 1999, taxpayers (other than small business taxpayers) will not be able to offset an assessable balancing adjustment against the cost or written down value of replacement or other plant unless the disposal was involuntary.

    Balancing adjustment offset and small business taxpayers

    The balancing adjustment offset will continue to be available to small business taxpayers until the commencement of the Simplified Tax System which is expected to come into operation on 1 July 2001.

    Balancing adjustment offset for involuntary disposals

    An involuntary disposal arises where plant is lost or destroyed or an Australian government agency acquires the item of plant compulsorily or by forced negotiation after 11.45am (by legal time in the ACT) on 21 September 1999.

    When an item of plant is subject to involuntary disposal, the assessable balancing adjustment can be offset against the cost of replacement plant. The replacement plant must be acquired no earlier than one year before the time of disposal of the plant 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 the replacement plant must be wholly used for income-producing purposes.

    Last modified: 13 Feb 2020QC 27380