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.
The Commissioner may make a written determination specifying the effective life of * depreciating assets. The determination may specify conditions for particular depreciating assets. 40-100(2)
A determination may specify a day from which it takes effect for * depreciating assets specified in the determination. 40-100(3)
A determination may operate retrospectively to a day specified in the determination if:
(a) there was no applicable determination at that day for the * depreciating asset covered by the determination; or
(b) the determination specifies a shorter * effective life for the depreciating asset covered by the determination than was previously applicable. Criteria for making a determination 40-100(4)
The Commissioner is to make a determination of the effective life of a *depreciating asset in accordance with subsections (5) and (6).
Firstly, estimate the period (in years, including fractions of years) the asset can be used by any entity for one or more of the following purposes:
(a) a *taxable purpose;
(b) the purpose of producing *exempt income or *non-assessable non-exempt income;
(c) the purpose of conducting *R & D activities, assuming that this is reasonably likely.
Secondly, if relevant for the asset:
(a) assume the asset will be subject to wear and tear at a rate that is reasonable for the Commissioner to assume; and
(b) assume the asset will be maintained in reasonably good order and condition; and
(c) have regard to the period within which the asset is likely to be scrapped, sold for no more than scrap value or abandoned.
However, for paragraph (c), disregard reasons attributable to the technical risk in conducting *R & D activities if it is reasonably likely that the asset will be used for such activities.