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Notes on balancing adjustments made in items 10 and 11

Last updated 1 June 2010

If a balancing adjustment event (within the meaning of section 40-295 of the ITAA 1997) occurs in relation to a 73BA depreciating asset, you may be entitled to a deduction under section 73BF of the ITAA 1936 (for a balancing loss) or required under that section to include an amount in your assessable income (a balancing profit). Generally, where an asset's termination value (worked out under section 40-300 of the ITAA 1997) is more than its adjustable value (worked out under section 40-85 of the ITAA 1997) just before a balancing adjustment event, an amount is included in your assessable income (balancing profit) under section 40-292 of the ITAA 1997. Where an asset's termination value is less than its adjustable value immediately before a balancing adjustment event, you can deduct an amount for the income year in accordance with that section (balancing loss).

If the section 73BA depreciating asset has never attracted deductions under Divisions 42 or 40 of the ITAA 1997, calculate the balancing adjustment under section 73BF. For section 73BA depreciating assets that have attracted such deductions, calculate the balancing adjustment under section 40-292 of the ITAA 1997.

Write the amount of this balancing adjustment at item 10 for a loss or at item 11 for a profit (negative).

Before starting items 10 and 11, see Guide to depreciating assets 2010 and Guide to the R&D tax concession.