ATO Interpretative Decision
ATO ID 2003/597
Income Tax
Capital Allowances: balancing adjustment event - takeover of unincorporated associationFOI status: may be released
This version is no longer current. Please follow this link to view the current version. |
-
This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
Status of this decision: Decision Current
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Does a balancing adjustment event occur, under paragraph 40-295(1)(a) of the Income Tax Assessment Act 1997 (ITAA 1997), for a depreciating asset when an incorporated association under the Associations Incorporation Act 1981 (AIA (Qld)) takes over an unincorporated association?
Decision
Yes. A balancing adjustment event occurs, under paragraph 40-295(1)(a) of the ITAA 1997, for a depreciating asset when the depreciating assets from an unincorporated association are transferred to an incorporated association.
Facts
A is an incorporated association under the AIA (Qld) and B is an unincorporated association.
The members of both A and B agreed to the takeover of B in their special general meetings.
A changed its name to adopt B's name. The amended constitution of A provides for A to take over B's assets and liabilities.
The voting members and board members of A and B are the same persons.
Paragraph 42-1(a) of the AIA (Qld) provides that a change of name of an incorporated association does not affect its legal personality or identity.
Reasons for Decision
Paragraph 40-295(1)(a) of the ITAA 1997 provides that a balancing adjustment event occurs for a depreciating asset if an entity stops holding the asset. A holder of an asset in any particular circumstance is set out in section 40-40 of the ITAA 1997. B owns the depreciating assets and is a holder of them pursuant to Item 10 of the table in section 40-40 of the ITAA 1997.
The amended constitution of A provides for A to take over B's assets and liabilities.
A's takeover of B results in a transfer of B's depreciating assets to A and this causes B to stop holding its assets because ownership (and, in this case holding) of the assets passes to A. Consequently, a balancing adjustment event occurs under paragraph 40-295(1)(a) of the ITAA 1997 for the depreciating assets held by B.
Date of decision: 13 June 2002Year of income: Year ended 30 June 2002
Legislative References:
Income Tax Assessment Act 1997
section 40-40
paragraph 40-295(1)(a)
paragraph 42-1(a) Related ATO Interpretative Decisions
ATO ID 2003/598
ATO ID 2003/599
Keywords
Balancing adjustments
Balancing adjustment event
Depreciating assets
Capital allowances CoE
ISSN: 1445-2782
| Date: | Version: | |
| You are here → | 13 June 2002 | Original statement |
| 11 July 2014 | Archived |