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.
This section applies if:
(a) a *balancing adjustment event happens in an income year (the event year ) for an asset you *held and for which:
(i) you can deduct, for an income year, an amount under section 40-25 , as that section applies apart from Division 355 and former section 73BC of the Income Tax Assessment Act 1936 ; or
(ii) you could have deducted, for an income year, an amount as described in subparagraph (i) if you had used the asset; and
(b) you are entitled under section 355-100 to *tax offsets for one or more income years for deductions (the R & D deductions ) under section 355-305 for the asset.
This section applies in a modified way if you have deductions for the asset under former section 73BA or 73BH of the Income Tax Assessment Act 1936 (see section 40-292 of the Income Tax (Transitional Provisions) Act 1997 ).Section 40-290 to be applied as if use for conducting R & D activities were use for a taxable purpose 40-292(2)
In applying section 40-290 (including references in that section to the reduction of deductions under section 40-25 ) in relation to the asset, assume that using the asset for a *taxable purpose includes using it for the purpose of conducting the *R & D activities to which the R & D deductions relate. Increase in amounts deductible under section 40-285 40-292(3)
If you are entitled under section 355-100 to a *tax offset for the event year in respect of deductions under Division 355 totalling at least $20,000, any amount (the section 40-285 amount ) you can deduct for the asset under section 40-285 (after applying subsection (2) of this section) for the event year is increased by:
(a) if your *aggregated turnover for the event year is less than $20 million - ½ of the amount worked out under subsection (5) of this section; and
(b) otherwise - 1/3 of the amount worked out under subsection (5) of this section. 40-292(4)
Any amount (the section 40-285 amount ) that is included in your assessable income for the asset under section 40-285 (after applying subsection (2) of this section) for the event year is increased by 1/3 of the amount worked out under subsection (5) of this section. Component of any increase in amounts deductible or assessable 40-292(5)
The amount is worked out as follows:
|Sum of your R & D deductions||×||Adjusted section 40-285 amount|
|Total decline in value|
(a) if the section 40-285 amount is a deduction - the amount of the deduction; or
(b) if the section 40-285 amount is an amount included in your assessable income - so much of the section 40-285 amount as does not exceed the total decline in value.