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ATO Interpretative Decision

ATO ID 2002/783 (Withdrawn)

Income Tax

Insurance proceeds where a depreciating asset is lost or destroyed
FOI status: may be released
  • This ATO ID is withdrawn as the issue is now dealt with in the Guide to depreciating assets (NAT 1996).
    This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Are insurance proceeds received where a depreciating asset is lost or destroyed assessable under Subdivision 20-A of the Income Tax Assessment Act 1997 ('ITAA 1997')?

Decision

No. Insurance proceeds received where a depreciating asset is lost or destroyed fall within the meaning of termination value under item 8, subsection 40-300(1) of the ITAA 1997, and are, therefore, not included in the amount of recoupment assessed under Subdivision 20-A of the ITAA 1997.

Facts

The taxpayer's computer and printer were stolen in May 2002. The assets were insured and a claim was made with the insurance company.

The insurance company provided a replacement computer and printer.

The replacement assets were used wholly for a taxable purpose.

Reasons for Decision

Subdivision 20-A of the ITAA 1997 includes in assessable income an amount of assessable recoupment as defined in section 20-20 of the ITAA 1997.

However, subsection 20-25(5) of the ITAA 1997 specifically excludes an amount you receive as assessable recoupment under subsection 20-20(2) of the ITAA 1997 that is the termination value of the depreciating asset.

An amount received or receivable from the insurance company where a depreciating asset is lost or destroyed falls within the definition of termination value in item 8 in the table in subsection 40-300(2) of the ITAA 1997.

Date of decision:  17 June 2002

Year of income:  Year ended 30 June 2002

Legislative References:
Income Tax Assessment Act 1997
   Subdivision 20-A
   subsection 20-20(2)
   subsection 20-25(5)
   subsection 40-300(2)

Related Public Rulings (including Determinations)
Taxation Determination TD 93/145

Related ATO Interpretative Decisions
ATO ID 2002/782

Keywords
Disposal of depreciating asset
Assessable recoupment
Lost or destroyed

Business Line:  Centres of Expertise Capital Allowances

Date of publication:  31 July 2002

ISSN: 1445-2782

history
  Date: Version:
  17 June 2002 Original statement
You are here 23 June 2006 Archived

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