INCOME TAX ASSESSMENT ACT 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-10 - CAPITAL ALLOWANCES: RULES ABOUT DEDUCTIBILITY OF CAPITAL EXPENDITURE  

Division 43 - Deductions for capital works  

Subdivision 43-F - Calculation of deduction  

Operative provisions

SECTION 43-210   Deduction for capital works begun after 26 February 1992  



Step 1

Calculate the amount worked out using the formula:


Portion of your CE × Days used × 0.04
365

where:

portion of your CE is the portion of * your construction expenditure that is attributable to the part of * your area that you used in the * 4% manner.

days used is the number of days in the income year that:

  • (a) you owned or were the lessee of that part of * your area and used it in the * 4% manner; or
  • (b) you were the holder of that part of * your area under a * quasi-ownership right over land granted by an * exempt Australian government agency or an * exempt foreign government agency, and used that part of your area in the 4% manner.

  • Step 2

    Reduce the Step 1 amount by the extent to which the part referred to in Step 1 was used only partly for the * purpose of producing assessable income.

    Note:

    This Step applies if:

  • · part of your income from the part referred to in Step 1 is exempt income; or
  • · part of the part referred to in Step 1 was not used for the purpose of producing assessable income or was not available for that use; or
  • · the part of the part referred to in Step 1 was not used for such a purpose during a part of the days used period.

  • Step 3

    Calculate the amount worked out using the formula:


    Portion of your CE × Days used × 0.025
    365

    where:

    portion of your CE is the portion of * your construction expenditure that is attributable to the part of * your area that you did not use in the * 4% manner but was used as described in Table 43-140 (Current year use).

    days used is the number of days in the income year that:

  • (a) you owned or were the lessee of that part of * your area and used it in that manner; or
  • (b) you were the holder of that part of * your area under a * quasi-ownership right over land granted by an * exempt Australian government agency or an * exempt foreign government agency, and used that part of your area in that manner.

  • Step 4

    Reduce the Step 3 amount by the extent to which the part referred to in Step 3:

  • (a) for a * hotel building or * apartment building - was used only partly for the * purpose of producing assessable income; or
  • (b) for any other capital works - was used only partly for the purpose of * producing assessable income or conducting * R & D activities.
  • Note:

    This Step applies if:

  • · part of your income from the part referred to in Step 3 is exempt income; or
  • · part of the part referred to in Step 3 was not used for the purpose of producing assessable income (or R & D activities) or was not available for that use; or
  • · the part of the part referred to in Step 3 was not used for such a purpose during a part of the days used period.

  • Step 5

    Add the Step 2 and Step 4 amounts.


    Step 6

    The amount of your deduction is the lesser of your Step 5 amount or the * undeducted construction expenditure for * your area.


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