Income Tax Assessment Act 1997
Note: A Commissioner ' s Remedial Power (CRP 2017/2) is relevant to this part of the tax law. Taxation Administration (Remedial Power - Small Business Restructure Roll-over) Determination 2017 (F2017L01687) modifies the operation of s 40-340 of the Income Tax Assessment Act 1997 and any other provisions of a taxation law whose operation is affected by the modified operation of s 40-340 in relation to an asset transferred under a small business restructure roll-over (item 8 of the table in s 40-340(1) ).
The operation of the relevant provisions is modified as follows:
If s 40-340 of ITAA 1997 provides for rollover relief in relation to a disposal of a depreciating asset because the condition in item 8 of the table in s 40-340(1) of ITAA 1997 is satisfied in relation to the asset, that section has effect as if it also provided that the disposal of the asset has no direct consequences under the income tax law (other than Div 40 of ITAA 1997).
The modification applies in respect of transfers on or after 8 May 2018.
An entity must treat a modification as not applying to it or any other entity if the modification would produce a less favourable result for it. The Commissioner is empowered by s 370-5 of Sch 1 to the Taxation Administration Act 1953 to make modifications, by legislative instrument, to ensure the law is administered to achieve its intended purpose or object.
You may exclude some or all of an amount that has been included in your assessable income for a * depreciating asset (the original asset ) as a result of a * balancing adjustment event to the extent that you choose to treat it as an amount to be applied under subsection (5) for one or more replacement assets. 40-365(2)
You can only make this choice if you stop * holding the asset because:
(a) the original asset is lost or destroyed; or
(b) the original asset is compulsorily acquired by an * Australian government agency; or
(c) the original asset is acquired by an entity (other than an Australian government agency or a *foreign government agency) under a power of compulsory acquisition conferred by a law covered under subsection (2A); or
(d) you dispose of the original asset to an entity (other than a foreign government agency) in circumstances meeting all of these conditions:
(i) the disposal takes place after a notice was served on you by or on behalf of the entity;
(ii) the notice invited you to negotiate with the entity with a view to the entity acquiring the asset by agreement;
(iii) the notice informed you that if the negotiations were unsuccessful, the asset would be compulsorily acquired by the entity;
(iv) the compulsory acquisition would have been under a power of compulsory acquisition conferred by a law covered under subsection (2A); or
(e) you dispose of land onto which the original asset was fixed to an entity (other than a foreign government agency) in circumstances meeting all of these conditions:
(i) a mining lease was compulsorily granted over the land;
(ii) the lease significantly affected your use of the land;
(iii) the lease was in force just before the disposal;
(iv) the entity to which you dispose of the land was the lessee under the lease; or
(f) you dispose of land onto which the original asset was fixed to an entity (other than a foreign government agency) in circumstances meeting all of these conditions:
(i) a mining lease would have been compulsorily granted over the land if you had not disposed of it;
(ii) that lease would have significantly affected your use of the land;
(iii) the entity to which you dispose of the land would have been the lessee under the lease.
A law is covered under this subsection if it is:
(a) an *Australian law (other than Chapter 6A of the Corporations Act 2001 ); or
(b) a *foreign law (other than a foreign law corresponding to Chapter 6A of the Corporations Act 2001 ).
You can only make this choice for a replacement asset if you incur the expenditure on the replacement asset, or you start to * hold it:
(a) no earlier than one year, or within a further period the Commissioner allows, before the * balancing adjustment event occurred; and
(b) no later than one year, or within a further period the Commissioner allows, after the end of the income year in which the balancing adjustment event occurred. 40-365(4)
You can only make this choice for a replacement asset if:
(a) at the end of the income year in which you incurred the expenditure on the asset, or you started to * hold it, you used it, or had it * installed ready for use, wholly for a * taxable purpose; and
(b) you can deduct an amount for it. 40-365(5)
For the purposes of applying this Act to the replacement asset:
(a) its * cost is reduced by the amount covered by the choice for the income year in which the asset ' s * start time occurs; and
(b) if the income year is later than the one in which the asset ' s * start time occurs - the sum of its * opening adjustable value for that later year and any amount included in the second element of the asset ' s cost for that later year is reduced by the amount covered by the choice.
If you are making the choice for 2 or more replacement assets, you apportion the amount covered by the choice between those items in proportion to their * cost.
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