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 work out the decline in value of a * depreciating asset for an income year using the diminishing value method in this way:
Asset ' s *effective life
base value is:
(a) for the income year in which the asset ' s * start time occurs - its * cost; or
(b) for a later year - the sum of its * opening adjustable value for that year and any amount included in the second element of its cost for that year.
days held is the number of days you * held the asset in the income year from its * start time, ignoring any days in that year when you did not use the asset, or have it * installed ready for use, for any purpose.
If you recalculate the effective life of a depreciating asset, you use that recalculated life in working out your deduction.
You can choose to recalculate effective life because of changed circumstances: see section 40-110 . That section also requires you to recalculate effective life in some cases.
The effective life of a vessel can change in some cases: see subsection 40-103(2) .
You cannot use the * diminishing value method to work out the decline in value of:
(a) * in-house software; or
(b) an item of * intellectual property (except copyright in a * film); or
(c) a * spectrum licence; or
(d) a * datacasting transmitter licence; or
(e) a * telecommunications site access right.
[ CCH Note: S 40-70(2) will be amended by No 151 of 2020, s 3 and Sch 9 item 102, by repealing para (d), applicable in relation to a datacasting transmitter licence that was in existence before 17 June 2021, as if those amendments had not been made.]
The decline in value of a * depreciating asset under this section for an income year cannot be more than the amount that is the asset ' s *base value for that income year.