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.
There is roll-over relief if:
(a) there is a * balancing adjustment event under section 40-295 because you cease to * hold a * depreciating asset that is a vessel (the original vessel ); and
(b) on the day that the balancing adjustment event occurs, you have a certificate for the vessel under Part 2 of the Shipping Reform (Tax Incentives) Act 2012 that:
(i) applies to that day; and
(ii) is not a * shipping exempt income certificate; and
(c) there is no roll-over relief under section 40-340 relating to the original vessel; and
(d) on the day occurring 2 years after the day you cease to hold the original vessel, you are the holder of another depreciating asset that is a vessel (the other vessel ):
(i) for which you choose to apply roll-over relief in relation to the original vessel; and
(ii) for which you have a certificate under Part 2 of the Shipping Reform (Tax Incentives) Act 2012 (other than a shipping exempt income certificate) that applies to the day of that choice; and
(e) you became the holder of the other vessel during the period starting 1 year before the day you cease to hold the original vessel and ending 2 years after that day. Choosing to apply roll-over relief 40-362(2)
The choice must:
(a) be in writing; and
(b) be made within 6 months after the end of the second income year after the income year in which the * balancing adjustment event occurs, or within a longer period allowed by the Commissioner. The effect of roll-over relief 40-362(3)
If there is roll-over relief under this section:
(a) subsection 40-285(1) does not apply to the * balancing adjustment event in relation to the original vessel; and
(b) an amount is included in your assessable income if the original vessel ' s * termination value exceeds the sum of:
(i) the original vessel ' s * adjustable value just before the balancing adjustment event occurred; and
(ii) the * cost of the other vessel (disregarding paragraph (3)(c)); and
(c) for the purpose of applying this Act to the other vessel, its cost is reduced (but not below zero) by the difference between:
(i) the original vessel ' s termination value; and
(ii) the original vessel ' s adjustable value just before the balancing adjustment event occurred.
The amount included in your assessable income under paragraph (3)(b) is the amount of the excess mentioned in that paragraph. It is included in the second income year after the income year in which the * balancing adjustment event occurs.