INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-10 - FINANCIAL TRANSACTIONS  

Division 250 - Assets put to tax preferred use  

Subdivision 250-F - Treatment of asset when Division ceases to apply to the asset  

SECTION 250-285   Treatment of asset after Division ceases to apply to the asset  

250-285(1)  
For the purposes of Division 40 , if:


(a) this Division applies to you and an asset; and


(b) the *arrangement period for the *tax preferred use of the asset ends at a particular time; and


(c) the asset would have had an *adjustable value at that time, for the purposes of Division 40 , if this Division had never applied to the asset;

the adjustable value of the asset, immediately after the end of the arrangement period, is taken to be equal to the amount worked out using the following method statement:

Method statement

Step 1.

Work out whether section 250-150 applies.


Step 2.

If section 250-150 does not apply, the amount is the *end value of the asset at the end of the arrangement period.


Step 3.

If section 250-150 does apply, the amount is worked out by:

  • (a) multiplying the *end value of the asset at the end of the *arrangement period by the *disallowed capital percentage; and
  • (b) then multiplying the adjustable value of the asset at the end of the arrangement period (worked out under section 40-85 ) by 100% minus the disallowed capital percentage); and
  • (c) then adding the amount obtained under paragraph (a) and the amount obtained under paragraph (b).
  • 250-285(2)  
    If:


    (a) this Division applies to you and an asset; and


    (b) the *arrangement period for the *tax preferred use of the asset ends; and


    (c) a net amount is included in your assessable income in relation to the *financial benefits that are *subject to the deemed loan treatment (taking into account the adjustments under Subdivision 250-E in relation to the financial benefits that are subject to the deemed loan treatment);

    the *cost base, and the *reduced cost base, of the asset are each taken to be reduced at the end of the arrangement period by an amount equal to the difference between:


    (d) the total amounts or values of the financial benefits that were subject to deemed loan treatment; and


    (e) the net amount referred to in paragraph (c).

    Note:

    See subsection (6) in relation to the application of paragraph (d).

    250-285(3)  
    If:


    (a) this Division applies to you and an asset; and


    (b) the *arrangement period for the *tax preferred use of the asset ends; and


    (c) a net amount is allowed to you as a deduction in relation to the *financial benefits that are *subject to the deemed loan treatment (taking into account the adjustments under Subdivision 250-E in relation to the financial benefits that are subject to the deemed loan treatment);

    the *cost base, and the *reduced cost base, of the asset are each taken to be reduced at the end of the arrangement period by an amount equal to the sum of:


    (d) the total amounts or values of the financial benefits that were subject to deemed loan treatment; and


    (e) the net amount referred to in paragraph (c).

    Note:

    See subsection (6) in relation to the application of paragraph (d).

    250-285(4)  
    If:


    (a) this Division applies to you and an asset; and


    (b) the *arrangement period for the *tax preferred use of the asset ends; and


    (c) a net amount is included in your assessable income in relation to the *financial benefits that are *subject to the deemed loan treatment (taking into account the adjustments under Subdivision 250-E in relation to the financial benefits that are subject to the deemed loan treatment);

    then, in determining the profit or loss on the sale of the asset, a deduction equal to the difference between the following is taken to have been allowed for expenditure by you in connection with the asset:


    (d) the total amounts or values of the financial benefits that were subject to deemed loan treatment; and


    (e) the net amount referred to in paragraph (c).

    Note:

    See subsection (6) in relation to the application of paragraph (d).

    250-285(5)  
    If:


    (a) this Division applies to you and an asset; and


    (b) the *arrangement period for the *tax preferred use of the asset ends; and


    (c) a net amount is allowed to you as a deduction in relation to the *financial benefits that are *subject to the deemed loan treatment (taking into account the adjustments under Subdivision 250-E in relation to the financial benefits that are subject to the deemed loan treatment);

    then, in determining the profit or loss on the sale of the asset, a deduction equal to the sum of the following is taken to have been allowed for expenditure by you in connection with the asset:


    (d) the total amounts or values of the financial benefits that were subject to deemed loan treatment; and


    (e) the net amount referred to in paragraph (c).

    Note:

    See subsection (6) in relation to the application of paragraph (d).

    250-285(6)  
    In applying paragraphs (2)(d), (3)(d), (4)(d) and (5)(d), disregard subsection 250-160(2) (reasonable estimate of end value treated as financial benefit subject to deemed loan treatment).


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