ATO Interpretative Decision
ATO ID 2003/111
General
Capital Allowances: termination value of a depreciating asset that has been stolenFOI status: may be released
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This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
If a balancing adjustment event occurs for a depreciating asset that has been stolen, what is the termination value of the asset for the purpose of working out the balancing adjustment amount under Subdivision 40-D of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
The termination value of a stolen depreciating asset under a balancing adjustment event is the amount or value received or receivable under an insurance policy or otherwise for the loss or destruction pursuant to Item 8 of the table in subsection 40-300(2) of the ITAA 1997.
Facts
The taxpayer owned a depreciating asset at the time it was stolen.
The taxpayer used the asset wholly for a taxable purpose.
The asset was insured against the event of theft.
Reasons for Decision
A balancing adjustment event may occur for a depreciating asset that is stolen because the asset stops being used (or installed ready for use) for any purpose and it is expected that it will never be used (or installed ready for use) again (paragraph 40-295(1)(b) of the ITAA 1997). In this case, Item 1 of the table in subsection 40-300(2) of the ITAA 1997 applies to prescribe a termination value of the market value of the asset when it ceased to be used (or installed ready for use).
Item 8 of the table in subsection 40-300(2) of the ITAA 1997 may also apply to a stolen depreciating asset because the theft of an asset may fall within the meaning of the phrase 'lost or destroyed'. In this case, a termination value of the amount or value received or receivable under an insurance policy or otherwise for the loss or destruction is prescribed.
If more than one item in the table in subsection 40-300(2) of the ITAA 1997 applies, the subsection specifies that the value under the last applicable item is to be used.
The termination value of a stolen depreciating asset under a balancing adjustment event is, therefore, the amount or value received or receivable under an insurance policy or otherwise for the loss or destruction pursuant to Item 8 of the table in subsection 40-300(2) of the ITAA 1997. If no amount or value is received or receivable under an insurance policy or otherwise for the loss or destruction of the depreciating asset, the termination value is nil.
Amendment History
| Date of amendment | Part | Comment |
|---|---|---|
| 6 June 2014 | Related ATOIDs | Updated related ATOIDs. |
Year of income: Year ended 30 June 2002
Legislative References:
Income Tax Assessment Act 1997
paragraph 40-295(1)(b)
subsection 40-300(2)
ATO ID 2002/782 ATO ID 2003/110 ATO ID 2003/112
Keywords
Losses from fraud, theft & embezzlement
Capital Allowances CoE
Balancing adjustment event
Termination value
Date reviewed: 24 October 2017
ISSN: 1445-2782
| Date: | Version: | |
| 26 November 2002 | Original statement | |
| You are here | 6 June 2014 | Updated statement |