Income Tax Assessment Act 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-10 - CAPITAL ALLOWANCES: RULES ABOUT DEDUCTIBILITY OF CAPITAL EXPENDITURE  

Division 40 - Capital allowances  

Subdivision 40-E - Low-value and software development pools  

Operative provisions

SECTION 40-425   Allocating assets to a low-value pool  

40-425(1)    
You may choose to allocate a ^* low cost asset you ^* hold to a low-value pool for the income year in which you start to use it, or have it ^* installed ready for use, for a ^* taxable purpose.

40-425(2)    

A low-cost asset is a ^* depreciating asset (except a ^* horticultural plant) whose ^* cost as at the end of the income year in which you start to use it, or have it ^* installed ready for use, for a ^* taxable purpose is less than $ 1,000.

40-425(3)    
You may also choose to allocate a ^* low-value asset to a low-value pool.

40-425(4)    
You cannot allocate a ^* depreciating asset to a low-value pool if:

(a)    its ^* cost does not exceed $ 300; and

(b)    you use the asset predominantly for the ^* purpose of producing assessable income that is not income from carrying on a ^* business; and

(c)    the asset is not part of a set of assets that you started to hold in that income year where the total cost of the set of assets exceeds $ 300; and

(d)    the total cost of the asset and any other identical, or substantially identical, asset that you start to hold in that income year does not exceed $ 300.

40-425(5)    

A low-value asset is a ^* depreciating asset, except a ^* horticultural plant, you ^* hold:

(a)    if you have deducted or can deduct amounts for it under this Division for a previous income year - for which you used the ^* diminishing value method; and

(b)    that has an ^* opening adjustable value for the current year of less than $ 1,000 (worked out using the diminishing value method); and

(c)    that is not a ^* low-cost asset.

40-425(6)    
A ^* depreciating asset:

(a)    to which Division 58 (about assets previously owned by an exempt entity) applied for an entity sale situation; and

(b)    for which you used the ^* diminishing value method; and

(c)    whose ^* adjustable value as at the end of the income year before the ^* current year is less than $ 1,000;

is also a low-value asset .

Exception: small business entities

40-425(7)    

You cannot allocate a ^* depreciating asset to a low-value pool if you deduct amounts for it under Subdivision 328-D (about capital allowances for small business entities).

Exception: medium sized businesses

40-425(7A)    

You cannot allocate a * depreciating asset to a low-value pool if the decline in value of the asset for any income year is determined by section 40-82 (about assets costing below a threshold).

Exception: R & D

40-425(8)    

You cannot allocate a * depreciating asset to a low-value pool if you are entitled under section 355-100 to a * tax offset for a deduction under section 355-305 for the asset for an income year starting before, or at the same time as, the allocation has effect.

Note:

A similar rule applies if you deducted or could have deducted amounts under former 73BA of the Income Tax Assessment Act 1936 (see section 40-430 of the Income Tax (Transitional Provisions) Act 1997 ).

Exception: assessable labour income

40-425(9)    

You cannot allocate a * depreciating asset to a low-value pool if, at the time you:

(a)    started to use it; or

(b)    had it * installed ready for use;

you reasonably expected to use it mainly for the purpose of gaining or producing your * assessable labour income.