INCOME TAX ASSESSMENT ACT 1936

PART III - LIABILITY TO TAXATION  

Division 16D - Certain arrangements relating to the use of property  

SECTION 159GJ   EFFECT OF APPLICATION OF DIVISION ON CERTAIN DEDUCTIONS ETC.  

159GJ(1)  
Where this Division applies in relation to an item of eligible depreciation property:


(a) (Repealed by No 101 of 2006 )


(b) in relation to any year of income the whole of which is included in or comprises the application period - no depreciation deduction shall be allowable to any taxpayer in relation to the item of property for that year of income;


(c) in relation to any other year of income in which the whole or a part of the application period occurs:


(i) in relation to any part (in this subsection referred to as the pre-application part ) of the year of income that precedes the application period - there shall be allowable to a taxpayer as a depreciation deduction in relation to the item of property:

(A) where this Division has not previously applied in relation to the item of property - the same depreciation deduction (if any) as would, apart from this Division, be allowable to the taxpayer; and

(B) in any other case - the same depreciation deduction (if any) as would, but for this application of this section, be allowable to the taxpayer;

(ii) in relation to the part of the year of income during which this Division applies - no depreciation deduction shall be allowable to any taxpayer in relation to the item of property; and

(iii) in relation to any part (in this subsection referred to as the post-application part ) of the year of income that occurs after the application period (not being a part that occurs after the commencement of a subsequent application period):

(A) the residual amount in relation to the item of eligible depreciation property at any time (in this sub-subparagraph referred to as the relevant time ) during the post-application part is an amount ascertained in accordance with the formula:


A   +   B   -   C


where:
A is the amount that, but for this application of this section, would be the residual amount at the relevant time in relation to the eligible amount (in this subparagraph referred to as the relevant eligible amount ) by reason of which the item is an item of eligible depreciation property;
B is:
  • (a) where paragraph (b) of this component does not apply - the amount that, in determining the residual amount in component A, would be taken into account as depreciation under subsection 159GF(1) in respect of the application period; and
  • (b) where, in determining the residual amount in component A, depreciation deductions taken into account in respect of the post-application part would be calculated under this Act or the Income Tax Assessment Act 1997 using the diminishing value method - the amount that, in determining the residual amount in component A, would be taken into account under subsection 159GF(1) as depreciation deductions in respect of the application period and the part of the post-application part before the relevant time; and

  • C is:
  • (a) where paragraph (a) of component B applies - an amount equal to the total notional principal in relation to the relevant eligible amount in relation to the application period; and
  • (b) where paragraph (b) of component B applies - the sum of:
  • (i) the total notional principal in relation to the relevant eligible amount in relation to the application period; and
  • (ii) the amount that, in determining the residual amount in component A, would be taken into account as depreciation deductions under subsection 159GF(1) in respect of the part of the post-application part before the relevant time if the depreciated value under this Act, the undeducted cost under the former Division 42 of the Income Tax Assessment Act 1997 or the adjustable value under Division 40 of that Act, of the item of eligible depreciation property at the beginning of the year of income in which this Division ceases to apply were equal to the residual amount at the beginning of the application period as reduced by the total notional principal in relation to the relevant eligible amount in relation to the application period;

  • (B) for the purposes of any application of this Act or the Income Tax Assessment Act 1997 , in relation to the item of property in relation to the post-application part - the depreciated value, within the meaning of Division 3 of this Part, the undeducted cost under the former Division 42 of the Income Tax Assessment Act 1997 or the adjustable value under Division 40 of that Act, of the item of property at any time during the post-application part shall be taken to be an amount equal to the residual amount in relation to the relevant eligible amount at that time as ascertained in accordance with sub-subparagraph (A); and

    (C) the depreciation deduction (if any) allowable to a taxpayer in relation to the item of property in relation to the post-application part is the depreciation deduction that would be allowable in respect of that period if this Division did not apply and, in the case of an item of property in relation to which the former paragraph 56(1)(a) of this Act or the diminishing value method under the former Division 42, or Division 40 , of the Income Tax Assessment Act 1997 would, apart from this Division, apply, if the depreciated value, within the meaning of the former section 62 of this Act, the undeducted cost, under the former Division 42 of the Income Tax Assessment Act 1997 or the adjustable value under Division 40 of that Act, of the item of property at the beginning of the year of income were equal to the residual amount, as ascertained under sub-subparagraph (A), in relation to the relevant eligible amount at the commencement of the post-application part;


    (d) the residual amount at any time (in this paragraph referred to as the relevant time ) after the year of income in which the application period ends (not being a time after the commencement of a subsequent application period) in relation to the eligible amount (in this paragraph referred to as the relevant eligible amount ) by reason of which the item is an item of eligible depreciation property is the amount that would be the residual amount in relation to the relevant eligible amount in relation to the relevant time under sub-subparagraph (1)(c)(iii)(A) if the post-application part referred to in that sub-subparagraph extended to include the relevant time; and


    (e) for the purpose of the application of this Act and the Income Tax Assessment Act 1997 in relation to the item of property at any time after the year of income in which the application period ends - there shall be taken to have been allowed as a depreciation deduction in relation to the item of property in relation to the application period an amount equal to the total notional principal in relation to the eligible amount by reason of which the item of property is eligible depreciation property in relation to the application period.

    159GJ(2)  
    Where this Division applies in relation to an item of Division 10 , 10AA or 10A property:


    (a) no deduction is allowable to any taxpayer under:


    (i) (Repealed by No 101 of 2006 )

    (ii) section 40-830 of the Income Tax Assessment Act 1997 for a project amount that is mining capital expenditure within the meaning of that Act; or

    (iii) Subdivision 40-B of that Act for a depreciating asset that is a forestry road or timber mill building;

    (iv) (Repealed by No 101 of 2006 )
    in relation to any amount of expenditure (not being expenditure incurred after the application period) by reason of which the item is Division 10 , 10AA or 10A property for any year of income in which the whole or a part of the application period occurs;


    (b) the residual amount at any time after the application period (not being a time after the commencement of a subsequent application period) in relation to an amount of expenditure (not being expenditure incurred after the application period) by reason of which the item is Division 10 , 10AA or 10A property is an amount equal to the amount that, but for this paragraph, would be the residual amount at that time in relation to the amount of expenditure under subsection 159GF(3) reduced by an amount equal to the total notional principal in relation to the amount of expenditure in relation to the application period and any prior application period; and


    (c) for the purposes of the application of:


    (i) (Repealed by No 101 of 2006 )

    (ii) section 40-830 of the Income Tax Assessment Act 1997 for a project amount that is mining capital expenditure within the meaning of that Act; or

    (iii) Subdivision 40-B of that Act for a depreciating asset that is a forestry road or timber mill building;

    (iv) (Repealed by No 101 of 2006 )
    in relation to an amount of expenditure (not being expenditure incurred after the application period) by reason of which the item is Division 10 , 10AA or 10A property at any time after the application period, there shall be taken to have been allowed in respect of the amount of expenditure a deduction under whichever of those provisions applies in respect of the amount of expenditure of an amount equal to the total notional principal in relation to the amount of expenditure in relation to the application period.

    159GJ(3)  
    Where this Division applies in relation to an item of Division 10AAA property:


    (a) no deduction is allowable to any taxpayer under section 40-830 of the Income Tax Assessment Act 1997 for a project amount that is transport capital expenditure within the meaning of that Act in relation to any amount of expenditure (not being expenditure incurred after the application period) by reason of which the item is Division 10AAA property for any year of income in which the whole or a part of the application period occurs; and


    (b) the residual amount at any time after the application period (not being a time after the commencement of a subsequent application period) in relation to an amount of expenditure (not being expenditure incurred after the application period) by reason of which the item is Division 10AAA property is an amount equal to the amount that, but for this paragraph, would be the residual amount at that time in relation to the amount of expenditure under subsection 159GF(4) reduced by an amount equal to the total notional principal in relation to the amount of expenditure in relation to the application period and any prior application period; and


    (c) for the purposes of the application of section 40-830 of the Income Tax Assessment Act 1997 , for a project amount that is transport capital expenditure within the meaning of that Act, in relation to an amount of expenditure (not being expenditure incurred after the application period) by reason of which the item is Division 10AAA property for any year of income after the year of income in which this Division ceases to apply - it is taken to be a requirement of that section that the deduction allowable under that section in respect of the amount of expenditure does not exceed the residual amount in relation to the amount of expenditure as worked out in accordance with paragraph (b).

    159GJ(4)  
    Where this Division applies in relation to an item of Division 10C or 10D property:


    (a) in relation to any year of income the whole of which is included in or comprises the application period - no deduction shall be allowable to any taxpayer under Division 43 of the Income Tax Assessment Act 1997 , in relation to any amount of expenditure by reason of which the item is Division 10C or 10D property for that year of income;


    (b) in relation to any other year of income in which the whole or a part of the application period occurs:


    (i) in relation to any part (in this subsection referred to as the pre-application part ) of the year of income that precedes the application period - there shall be allowable to the taxpayer as a deduction under Division 43 of the Income Tax Assessment Act 1997 in relation to an amount of expenditure by reason of which the item is Division 10C or 10D property:

    (A) where this Division has not previously applied in relation to the amount of expenditure - the same deduction (if any) as would, apart from this Division, be allowable under that Division; and

    (B) in any other case - the same deduction (if any) as would, but for this application of this section, be allowable under that Division;

    (ii) in relation to the part of the year of income during which this Division applies - no deduction shall be allowable to any taxpayer under Division 43 of the Income Tax Assessment Act 1997 in relation to any amount of expenditure by reason of which the item is Division 10C or 10D property; and

    (iii) in relation to any part (in this subsection referred to as the post-application part ) of the year of income that occurs after the application period (not being a part that occurs after the commencement of a subsequent application period):

    (A) the residual amount at any time during the post-application part in relation to an amount of expenditure (not being expenditure incurred after the application period) by reason of which the item is Division 10C or 10D property is an amount equal to the amount that, but for this paragraph, would be the residual amount at that time in relation to the amount of expenditure under subsection 159GF(5) reduced by an amount equal to the total notional principal in relation to the amount of expenditure in relation to the application period and any prior application period; and

    (B) (Repealed by No 101 of 2006 )

    (C) the deduction (if any) allowable to a taxpayer in relation to an amount of expenditure (not being expenditure incurred after the application period) by reason of which the item is Division 10C or 10D property under Division 43 of the Income Tax Assessment Act 1997 in relation to the post-application part is the deduction (if any) that would be allowable to the taxpayer under that Division in respect of that period if this Division (other than this sub-subparagraph) did not apply and if it were a requirement of that Division that the deduction did not exceed the residual amount in relation to the amount of expenditure as ascertained in accordance with sub-subparagraph (A);


    (c) the residual amount at any time after the year of income in which the application period ends (not being a time after the commencement of a subsequent application period) in relation to an amount of expenditure (not being expenditure incurred after the application period) by reason of which the item is Division 10C or 10D property is the amount that, but for this paragraph, would be the residual amount at that time in relation to the amount of expenditure under subsection 159GF(5) reduced by an amount equal to the total notional principal in relation to the amount of expenditure in relation to the application period and any prior application period; and


    (d) in the application of Division 43 of the Income Tax Assessment Act 1997 in relation to any year of income after the year of income in which this Division ceases to apply, in relation to an amount of expenditure (not being expenditure incurred after the application period) by reason of which the item is Division 10C or 10D property it shall be taken to be a requirement of Division 43 of the Income Tax Assessment Act 1997 that the deduction (if any) allowable to a taxpayer under that Division in respect of the amount of expenditure does not exceed the residual amount in relation to the amount of expenditure as ascertained in accordance with paragraph (c).

    159GJ(5)  
    If this Division applies in relation to an item of property that is an eligible spectrum licence:


    (a) an amount cannot be deducted under Division 40 of the Income Tax Assessment Act 1997 in relation to any amount of expenditure (other than expenditure incurred after the application period) by reason of which the item is an eligible spectrum licence for any year of income in which any of the application period occurs; and


    (b) the residual amount at any time after the application period (but before the start of a later application period) in relation to an amount of expenditure (other than expenditure incurred after the application period) because of which the item is an eligible spectrum licence is an amount equal to:

  • · the amount that, if not for this paragraph, would be the residual amount at that time in relation to the amount of expenditure under subsection 159GF(6) ;

  • reduced by:
  • · an amount equal to the total notional principal in relation to the amount of expenditure in relation to the application period and any prior application period; and

  • (c) for the purposes of applying Division 40 of the Income Tax Assessment Act 1997 in relation to an amount of expenditure (other than expenditure incurred after the application period) because of which the item is an eligible spectrum licence at any time after the application period, a deduction under that Division is taken to have been allowed, for the amount of expenditure, of an amount equal to the total notional principal in relation to the amount of expenditure in relation to the application period.


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