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.
You may choose to allocate a * low cost asset you * hold to a low-value pool for the income year in which you start to use it, or have it * installed ready for use, for a * taxable purpose. 40-425(2)
A low-cost asset is a * depreciating asset (except a * horticultural plant) whose * cost as at the end of the income year in which you start to use it, or have it * installed ready for use, for a * taxable purpose is less than $1,000.
You may also choose to allocate a * low-value asset to a low-value pool. 40-425(4)
You cannot allocate a * depreciating asset to a low-value pool if:
(a) its * cost does not exceed $300; and
(b) you use the asset predominantly for the * purpose of producing assessable income that is not income from carrying on a * business; and
(c) the asset is not part of a set of assets that you started to hold in that income year where the total cost of the set of assets exceeds $300; and
(d) the total cost of the asset and any other identical, or substantially identical, asset that you start to hold in that income year does not exceed $300. 40-425(5)
A low-value asset is a * depreciating asset, except a * horticultural plant, you * hold:
(a) if you have deducted or can deduct amounts for it under this Division for a previous income year - for which you used the * diminishing value method; and
(b) that has an * opening adjustable value for the current year of less than $1,000 (worked out using the diminishing value method); and
(c) that is not a * low-cost asset.
A * depreciating asset:
(a) to which Division 58 (about assets previously owned by an exempt entity) applied for an entity sale situation; and
(b) for which you used the * diminishing value method; and
(c) whose * adjustable value as at the end of the income year before the * current year is less than $1,000;
is also a low-value asset .Exception: small business entities 40-425(7)
You cannot allocate a * depreciating asset to a low-value pool if you deduct amounts for it under Subdivision 328-D (about capital allowances for small business entities).
[ CCH Note: S 40-425(7A) will be inserted by No 51 of 2019, s 3 and Sch 2 item 3, effective 1 July 2019. S 40-425(7A) will read:
Exception: medium sized businesses]
You cannot allocate a *depreciating asset to a low-value pool if the decline in value of the asset for any income year is determined by section 40-82 (about assets costing less than $30,000).
You cannot allocate a *depreciating asset to a low-value pool if you are entitled under section 355-100 to a *tax offset for a deduction under section 355-305 for the asset for an income year starting before, or at the same time as, the allocation has effect.
A similar rule applies if you deducted or could have deducted amounts under former 73BA of the Income Tax Assessment Act 1936 (see section 40-430 of the Income Tax (Transitional Provisions) Act 1997 ).