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.
You can deduct an amount equal to the decline in value for an income year (as worked out under this Subdivision) of a * depreciating asset that is one of these:
(a) a * water facility;
(b) a * horticultural plant;
(c) a *fodder storage asset;
(d) a *fencing asset.
Sections 40-540 , 40-545 , 40-548 and 40-551 show you how to work out the decline.
Generally, only one taxpayer can deduct amounts for a depreciating asset. However, if you and another taxpayer jointly hold the asset, each of you deduct amounts for it: see section 40-35 .
However, the applicable condition in section 40-525 must be satisfied for the * depreciating asset. Limit on deduction 40-515(3)
You cannot deduct more in total than:
(a) for a * water facility - the amount of capital expenditure (disregarding expenditure that you cannot deduct because of section 26-100 (about water infrastructure improvement expenditure)) incurred on the facility; or
(b) for a * horticultural plant - the amount of capital expenditure incurred on the plant; or
(c) for a *fodder storage asset - the amount of capital expenditure incurred on the asset; or
(d) for a *fencing asset - the amount of capital expenditure incurred on the asset.
You must reduce your deduction for a * water facility, *fodder storage asset or *fencing asset for an income year by the part of the decline in value of the facility or asset that is attributable to the period (if any) in the income year when it was:
(a) not wholly used in carrying on a * primary production business on land in Australia; or
(b) not wholly used for a * taxable purpose.
Paragraph (4)(a) does not apply to a * water facility if the expenditure incurred on the construction, manufacture, installation or acquisition of the water facility was incurred by an * irrigation water provider.
An irrigation water provider is an entity whose * business is primarily and principally the supply (otherwise than by using a * motor vehicle) of water to entities for use in * primary production businesses on land in Australia.
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