Income Tax Assessment Act 1997
SECTION 40-365 Involuntary disposals 40-365(1)
You may exclude some or all of an amount that has been included in your assessable income for a * depreciating asset (the original asset ) as a result of a * balancing adjustment event to the extent that you choose to treat it as an amount to be applied under subsection (5) for one or more replacement assets.
40-365(2)
You can only make this choice if you stop * holding the asset because:
(a) the original asset is lost or destroyed; or
(b) the original asset is compulsorily acquired by an * Australian government agency; or
(c) the original asset is acquired by an entity (other than an Australian government agency or a *foreign government agency) under a power of compulsory acquisition conferred by a law covered under subsection (2A); or
(d) you dispose of the original asset to an entity (other than a foreign government agency) in circumstances meeting all of these conditions:
(i) the disposal takes place after a notice was served on you by or on behalf of the entity;
(ii) the notice invited you to negotiate with the entity with a view to the entity acquiring the asset by agreement;
(iii) the notice informed you that if the negotiations were unsuccessful, the asset would be compulsorily acquired by the entity;
(iv) the compulsory acquisition would have been under a power of compulsory acquisition conferred by a law covered under subsection (2A); or
(e) you dispose of land onto which the original asset was fixed to an entity (other than a foreign government agency) in circumstances meeting all of these conditions:
(i) a mining lease was compulsorily granted over the land;
(ii) the lease significantly affected your use of the land;
(iii) the lease was in force just before the disposal;
(iv) the entity to which you dispose of the land was the lessee under the lease; or
(f) you dispose of land onto which the original asset was fixed to an entity (other than a foreign government agency) in circumstances meeting all of these conditions:
(i) a mining lease would have been compulsorily granted over the land if you had not disposed of it;
(ii) that lease would have significantly affected your use of the land;
(iii) the entity to which you dispose of the land would have been the lessee under the lease.
40-365(2A)
A law is covered under this subsection if it is:
(a) an *Australian law (other than Chapter 6A of the Corporations Act 2001 ); or
(b) a *foreign law (other than a foreign law corresponding to Chapter 6A of the Corporations Act 2001 ).
40-365(3)
You can only make this choice for a replacement asset if you incur the expenditure on the replacement asset, or you start to * hold it:
(a) no earlier than one year, or within a further period the Commissioner allows, before the * balancing adjustment event occurred; and
(b) no later than one year, or within a further period the Commissioner allows, after the end of the income year in which the balancing adjustment event occurred.
40-365(4)
You can only make this choice for a replacement asset if:
(a) at the end of the income year in which you incurred the expenditure on the asset, or you started to * hold it, you used it, or had it * installed ready for use, wholly for a * taxable purpose; and
(b) you can deduct an amount for it.
40-365(5)
For the purposes of applying this Act to the replacement asset:
(a) its * cost is reduced by the amount covered by the choice for the income year in which the asset ' s * start time occurs; and
(b) if the income year is later than the one in which the asset ' s * start time occurs - the sum of its * opening adjustable value for that later year and any amount included in the second element of the asset ' s cost for that later year is reduced by the amount covered by the choice.
40-365(6)
If you are making the choice for 2 or more replacement assets, you apportion the amount covered by the choice between those items in proportion to their * cost.
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