Income Tax Assessment Act 1997
Note: A Commissioner ' s Remedial Power (CRP 2017/2) is relevant to this part of the tax law. Taxation Administration (Remedial Power - Small Business Restructure Roll-over) Determination 2017 (F2017L01687) modifies the operation of s 40-340 of the Income Tax Assessment Act 1997 and any other provisions of a taxation law whose operation is affected by the modified operation of s 40-340 in relation to an asset transferred under a small business restructure roll-over (item 8 of the table in s 40-340(1) ).
The operation of the relevant provisions is modified as follows:
If s 40-340 of ITAA 1997 provides for rollover relief in relation to a disposal of a depreciating asset because the condition in item 8 of the table in s 40-340(1) of ITAA 1997 is satisfied in relation to the asset, that section has effect as if it also provided that the disposal of the asset has no direct consequences under the income tax law (other than Div 40 of ITAA 1997).
The modification applies in respect of transfers on or after 8 May 2018.
An entity must treat a modification as not applying to it or any other entity if the modification would produce a less favourable result for it. The Commissioner is empowered by s 370-5 of Sch 1 to the Taxation Administration Act 1953 to make modifications, by legislative instrument, to ensure the law is administered to achieve its intended purpose or object.
A depreciating asset is an asset that has a limited * effective life and can reasonably be expected to decline in value over the time it is used, except:
(a) land; or
(b) an item of * trading stock; or
(c) an intangible asset, unless it is mentioned in subsection (2). 40-30(2)
These intangible assets are depreciating assets if they are not * trading stock:
(a) * mining, quarrying or prospecting rights;
(b) * mining, quarrying or prospecting information;
(ba) (Repealed by No 96 of 2014)
(bb) (Repealed by No 96 of 2014)
(c) items of * intellectual property;
(d) * in-house software;
(e) * IRUs;
(f) * spectrum licences;
(g) * datacasting transmitter licences;
(h) * telecommunications site access rights.
[ CCH Note: S 40-30(2) will be amended by No 151 of 2020, s 3 and Sch 9 item 101, by repealing para (g), applicable in relation to a datacasting transmitter licence that was in existence before 17 June 2021, as if those amendments had not been made.]
This Division applies to an improvement to land, or a fixture on land, whether the improvement or fixture is removable or not, as if it were an asset separate from the land.
Whether such an asset is a depreciating asset depends on whether it falls within the definition in subsection (1).
Whether a particular composite item is itself a depreciating asset or whether its components are separate depreciating assets is a question of fact and degree which can only be determined in the light of all the circumstances of the particular case.
A car is made up of many separate components, but usually the car is a depreciating asset rather than each component.
A floating restaurant consists of many separate components (like the ship itself, stoves, fridges, furniture, crockery and cutlery), but usually these components are treated as separate depreciating assets.
This Division applies to a renewal or extension of a * depreciating asset that is a right as if the renewal or extension were a continuation of the original right. 40-30(6)
This Division applies to a * mining, quarrying or prospecting right (the new right ) as if it were a continuation of another mining, quarrying or prospecting right you * held if:
(a) the other right ends; and
(b) the new right and the other right relate to the same area, or any difference in area is not significant.