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Limited recourse debt arrangements

Last updated 31 May 2005

If a depreciating asset is acquired under a limited recourse debt arrangement (including a hire purchase agreement or instalment sale) which terminates after 27 February 1998 and part of the debt principal remains unpaid because of the limited recourse, an adjustment to assessable income may be required. To the extent that the capital allowance deductions exceed the actual amount outlaid under the arrangement, an amount is included in assessable income.

If you are not sure how to work out your adjustment to assessable income, contact your tax adviser or the ATO.