ATO Interpretative Decision
ATO ID 2003/599 (Withdrawn)
Income Tax
Capital Allowances: balancing adjustment event - name change & takeover of unincorporated associationFOI status: may be released
-
This ATO ID is withdrawn as it is a simple restatement of the law and does not contain an interpretative decision.This document incorporates revisions made since original publication.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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Does a balancing adjustment event occur, under paragraph 40-295(1)(a) of the Income Tax Assessment Act 1997 (ITAA 1997), for a depreciating asset when an incorporated association under the Associations Incorporation Act 1981 (AIA (Qld)) changes its name and takes over an unincorporated association?
Decision
No. A balancing adjustment event does not occur, under paragraph 40-295(1)(a) of the ITAA 1997, for a depreciating asset when the incorporated association changes its name and continues to hold its depreciating assets when it takes over an unincorporated association.
Facts
A is an incorporated association under the AIA (Qld) and B is an unincorporated association.
The members of both A and B agreed to the takeover of B in their special general meetings.
A changed its name to adopt B's name. The amended constitution of A provides for A to take over B's assets and liabilities.
The voting members and board members of A and B are the same persons.
Paragraph 42-1(a) of the AIA (Qld) provides that a change of name of an incorporated association does not affect its legal personality or identity.
Reasons for Decision
Paragraph 40-295(1)(a) of the ITAA 1997 provides that a balancing adjustment event occurs for a depreciating asset if an entity stops holding the asset. A holder of an asset in any particular circumstance is set out in section 40-40 of the ITAA 1997. A owns the depreciating assets and is a holder of them pursuant to Item 10 of the table in section 40-40 of the ITAA 1997.
A changed its name to B and takes over B. Paragraph 42(1)(a) of Division 3 of the AIA (Qld) provides that a change of name of an incorporated association does not affect its legal personality or identity. Therefore, A under B's name continues as the same continuing entity as before the name change. A also continues to hold its depreciating assets as no transfer of assets is made to another entity after the name change and takeover of B. Therefore, no balancing adjustment event arises for A.
Date of decision: 13 June 2003Year of income: Year ended 30 June 2002
Legislative References:
Income Tax Assessment Act 1997
section 40-40
paragraph 40-295(1)(a)
paragraph 42-1(a) Related ATO Interpretative Decisions
ATO ID 2003/597
ATO ID 2003/598
Keywords
Balancing adjustments
Balancing adjustment event
Depreciating assets
Capital allowances CoE
ISSN: 1445-2782
| Date: | Version: | |
| 13 June 2003 | Original statement | |
| You are here | 11 July 2014 | Archived |