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 first element is worked out as at the time when you began to *hold the *depreciating asset (except for a case to which item 3, 4 or 14 of the table in subsection (2) applies). It is:
(a) if an item in that table applies - the amount specified in that item; or
(b) otherwise - the amount you are taken to have paid to hold the asset under section 40-185 .
The first element of the cost may be modified by a later provision in this Subdivision.
Section 230-505 provides special rules for working out the amount of consideration for an asset if the asset is a Division 230 financial arrangement or a Division 230 financial arrangement is involved in that consideration.
If more than one item in this table covers the asset, apply the last item that covers it.
|First element of the cost of a depreciating asset|
|Item||In this case:||The cost is:|
|1||A *depreciating asset you *hold is split into 2 or more assets||For each of the assets into which it is split, the amount worked out under section 40-205|
|2||A *depreciating asset or assets that you *hold is or are merged into another depreciating asset||For the other asset, the amount worked out under section 40-210|
|3||A *balancing adjustment event happens to a *depreciating asset you *hold because you stop using it for any purpose expecting never to use it again, and you continue to hold it||The *termination value of the asset at the time of the event|
|4||A *balancing adjustment event happens to a *depreciating asset you *hold but have not used because you expect never to use it, and you continue to hold it||The *termination value of the asset at the time of the event|
|5||A partnership asset that was *held, just before it became a partnership asset, by one or more partners (whether or not any other entity was a joint holder) or a partnership asset to which subsection 40-295(2) applies||The *market value of the asset when the partnership started to hold it or when the change referred to in subsection 40-295(2) occurred|
|6||There is roll-over relief under section 40-340 for a *balancing adjustment event happening to a *depreciating asset||The *adjustable value of the asset to the transferor just before the balancing adjustment event occurred|
|7||You are the legal owner of a *depreciating asset that is hired under a *hire purchase agreement and you start *holding it because the entity to whom it is hired does not become the legal owner||The *market value of the asset when you started to hold it|
|8||You started to *hold the asset under an *arrangement and:||The market value of the asset when you started to hold it|
|(a)||there is at least one other party to the arrangement with whom you did not deal at *arm ' s length; and|
|(b)||apart from this item, the first element of the asset ' s cost would exceed its *market value|
|9||You started to *hold the asset under an *arrangement that was private or domestic in nature to you (for example, a gift)||The *market value of the asset when you started to hold it|
|10||The *Finance Minister has determined a cost for you under section 49A, 49B, 50A, 50B, 51A or 51B of the Airports (Transitional) Act 1996||The cost so determined|
|11||To which Division 58 (which deals with assets previously owned by an *exempt entity) applies||The amount applicable under subsections 58-70(3) and (5)|
|12||A *balancing adjustment event happens to a *depreciating asset because a person dies and the asset devolves to you as the person ' s *legal personal representative||The asset ' s *adjustable value on the day the person died or, if the asset is allocated to a low-value pool, so much of the *closing pool balance for the income year in which the person died as is reasonably attributable to the asset|
|13||You started to *hold a *depreciating asset because it *passed to you as the beneficiary or a joint tenant||The *market value of the asset when you started to hold it reduced by any *capital gain that was disregarded under section 128-10 or subsection 128-15(3), whether by the deceased or by the *legal personal representative|
|14||A *balancing adjustment event happens to a *depreciating asset you *hold because of subsection 40-295(1B)||What would, apart from subsection 40-285(3), be the asset ' s *adjustable value on the day the *balancing adjustment event occurs|
The first element of *cost includes an amount you paid or are taken to have paid in relation to starting to *hold the *depreciating asset if that amount is directly connected with holding the asset.
The first element of *cost of a *depreciating asset does not include an amount that forms part of the second element of cost of another depreciating asset.
The first element of cost may be reduced under section 40-1130 to account for exploration benefits received under farm-in farm-out arrangements.
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