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-C - Cost  

Operative provisions

SECTION 40-205  

40-205   Cost of a split depreciating asset  

If you split a *depreciating asset into separate assets as mentioned in section 40-115 , the first element of the cost of each of the separate assets is a reasonable proportion of the sum of these amounts:

(a) the *adjustable value of the original asset just before it was split; and

(b) the amount you are taken to have paid under section 40-185 for any economic benefit involved in splitting the original asset.

Example:

Barry owns a spectrum licence that covers 3 areas: Area A, area B and area C. The licence has an adjustable value of $160,000. He sells area A to Chris, and his costs of splitting are $10,000. Barry is taken to have split the licence into 2 assets.

On the basis of their relative market values, Barry apportions $170,000 to area A (that he disposed of) and to the licence he still holds for areas B and C.