INCOME TAX (TRANSITIONAL PROVISIONS) ACT 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-10 - CAPITAL ALLOWANCES: RULES ABOUT DEDUCTIBILITY OF CAPITAL EXPENDITURE  

Division 40 - Capital allowances  

Subdivision 40-B - Core provisions  

SECTION 40-72   New diminishing value method not to apply in some cases  

40-72(1)  
If:


(a) you are taken to start holding a depreciating asset on or after 10 May 2006 because of section 40-115 (about splitting a depreciating asset) or 40-125 (about merging depreciating assets) of the Income Tax Assessment Act 1997 ; and


(b) it is reasonable to conclude that you split the asset or merged the assets for the main purpose of ensuring that the decline in value of the asset or assets (after the splitting or merging) would be worked out under section 40-72 of that Act;

that Act applies to you as if you had started to hold the split or merged asset or assets before 10 May 2006.

40-72(2)  
The Income Tax Assessment Act 1997 applies to you as if you had started to hold a depreciating asset before 10 May 2006 if:


(a) you had actually started to hold it before that day; and


(b) on or after 10 May 2006, you stop holding the depreciating asset; and


(c) it is reasonable to conclude that you did this for the main purpose of ensuring that the decline in value of the asset would be worked out under section 40-72 of that Act.

40-72(3)  
The Income Tax Assessment Act 1997 applies to you as if you had started to hold a depreciating asset (the substituted asset ) before 10 May 2006 if:


(a) you started to hold the substituted asset on or after that day under an arrangement; and


(b) the substituted asset is identical to or has a purpose similar to another depreciating asset that another entity acquired from you on or after that day under that arrangement; and


(c) you did not deal with the other entity at arm's length; and


(d) it is reasonable to conclude that you entered into the arrangement for the main purpose of ensuring that the decline in value of the substituted asset would be worked out under section 40-72 of that Act.




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