INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-45 - RULES FOR PARTICULAR INDUSTRIES AND OCCUPATIONS  

Division 328 - Small business entities  

Subdivision 328-D - Capital allowances for small business entities  

Operative provisions

SECTION 328-175   Calculations for depreciating assets  

328-175(1)  


You can choose to calculate your deductions and some amounts of assessable income under this Subdivision instead of under Division 40 for an income year for all the *depreciating assets that you *hold if:


(a) you are a *small business entity for the income year; and


(b) you started to use the assets or have them *installed ready for use, for a *taxable purpose during or before that income year.

This subsection has effect subject to subsections (2) to (10).

Note:

If you choose to use this Subdivision for an income year, you continue to use this Subdivision for your general small business pool for a later income year even if you are not a small business entity, or do not choose to use this Subdivision, for the later year: see section 328-220 .

Exception: assets to which Division 40 does not apply

328-175(2)  
This Subdivision does not apply to a * depreciating asset to which Division 40 does not apply because of section 40-45 . Exception: primary production

328-175(3)  


If you are a *small business entity for the income year, for each * depreciating asset you use to carry on a * primary production business and for which you could deduct amounts under Subdivision 40-F (about primary production depreciating assets) or Subdivision 40-G (about capital expenditure of primary producers and other landholders) apart from subsection (1), you can choose:


(a) to deduct amounts for it under Subdivision 40-F or 40-G ; or


(b) to calculate your deductions for it under this Subdivision.

Note:

A choice made by a transferor under this subsection for an asset applies also to the transferee if roll-over relief under subsection 40-340(1) or (3) is chosen: see section 328-245 .

328-175(4)  


You must make the choice under subsection (3) for each *depreciating asset of the kind referred to in that subsection for the later of:


(a) the first income year for which you are, or last were, a *small business entity; or


(b) the income year in which you started to use the asset, or have it * installed ready for use, for a * taxable purpose.

Once you have made the choice for an asset, you cannot change it.

Exception: horticultural plants

328-175(5)  
You cannot deduct amounts for * horticultural plants (including grapevines) under this Subdivision. Exception: asset let on depreciating asset lease

328-175(6)  


You cannot deduct amounts for a * depreciating asset under this Subdivision if the asset is being or might reasonably be expected to be let predominantly on a * depreciating asset lease. Exception: assets in a low-value or software development pool

328-175(7)  
You cannot deduct amounts for a * depreciating asset under this Subdivision if:


(a) the asset was allocated to your low-value pool under Subdivision 40-E , or to your pool under the former Subdivision 42-L, during an income year for which you were not a *small business entity or had not chosen to use this Subdivision; or


(b) the asset is * in-house software and expenditure on the asset is allocated to a software development pool under that Subdivision.

Note:

You will have to continue deducting amounts for these assets under Division 40 .

328-175(8)  


A * depreciating asset referred to in subsection (7) is not allocated to your *general small business pool under this Subdivision and does not qualify for a deduction under section 328-180 . Exception: assets for which previously entitled to a tax offset under the R & D provisions

328-175(9)  


You cannot deduct amounts for a *depreciating asset for any period under this Subdivision if you are entitled under section 355-100 to a *tax offset for a deduction under section 355-305 for the asset for the same or an earlier period. Exception: second-hand assets used in residential property

328-175(9A)  


You cannot deduct amounts for a *depreciating asset under this Subdivision to the extent that section 40-27 prevents you from deducting amounts under subsection 40-25(1) for the asset. Exception: restriction on choosing to use this Subdivision

328-175(10)  


If:


(a) you choose to use this Subdivision to deduct amounts for your *depreciating assets for an income year; and


(b) you do not choose to use this Subdivision for a later income year for which you satisfy the conditions to make this choice (see subsection (1));

you cannot choose to use this Subdivision until at least 5 years after the first later income year for which you satisfied the conditions to make this choice but did not do so.

Note 1:

Your ability to choose to use this Subdivision may also be restricted by section 328-440 of the Income Tax (Transitional Provisions) Act 1997 .

Note 2:

If you choose to use this Subdivision for an income year, you continue to use it for assets that have been allocated to your general small business pool for a later income year even if you are not a small business entity, or do not choose to use this Subdivision, for the later year: see section 328-220.

Note 3:

Subsections 328-180(2) and (3) of the Income Tax (Transitional Provisions) Act 1997 affect the operation of this subsection in relation to income years ending on or after 12 May 2015.


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