Taxation Laws Amendment Act (No. 1) 1999 (16 of 1999)

Schedule 7   Deductible expenditure and CGT cost bases

Part 1   Amendment of the Income Tax Assessment Act 1936

7   After section 160ZJ

Insert:

160ZJA Reduction of amounts for purposes of cost base

(1) A reference in subsection 160ZH(1) to the amount of any consideration or the amount of any expenditure, in respect of an asset (other than the taxpayer's interest in a partnership asset of a partnership in which the taxpayer is a partner) is a reference to the sum of:

(a) the amount of the consideration or the amount of the expenditure, as the case may be (as worked out under section 160ZH); and

(b) any amount that is included in the assessable income of the taxpayer of any year of income by virtue of a provision of this Act other than this Part the effect of which is to reverse a deduction covered by paragraph (c) or subparagraph (d)(iii);

reduced by:

(c) any part of the consideration or of the expenditure that has been allowed or is allowable as a deduction to the taxpayer in respect of any year of income; and

(d) for the purpose of the reference in paragraphs 160ZH(1)(a), (c) and (d):

(i) any amount of expenditure in relation to the asset that, apart from subsections 124ZB(4) and 124ZG(5), would have been allowed or allowable under Division 10C or 10D of Part III as a deduction to the taxpayer, after the acquisition of the asset, in respect of any year of income; and

(ii) any amount that, apart from subsection 388-55(3) of the Income Tax Assessment Act 1997, would have been allowed or allowable under Subdivision 387-A or 387-B of that Act as a deduction to the taxpayer, after the acquisition of the asset, in respect of any year of income; and

(iii) any amount of expenditure that, apart from paragraph 43-70(2)(h) of the Income Tax Assessment Act 1997, would have been allowed or allowable under Division 43 of that Act as a deduction to the taxpayer, after the acquisition of the asset, in respect of any year of income; and

(iv) any other expenditure that is capital expenditure by the taxpayer or any other person in respect of the asset that has been allowed or is allowable as a deduction to the taxpayer, after the acquisition of the asset, in respect of any year of income.

(2) The reference in paragraph (1)(b) to an amount that is included in the assessable income of a taxpayer includes a reference to an amount:

(a) that is taken by subsection 60(1A) of this Act to be so included for the asset for the purposes of subsection 60(1); or

(b) that is treated as being deducted for depreciation of another asset under section 42-285 or 42-290 of the Income Tax Assessment Act 1997; or

(c) that, apart from roll-over relief under sections 58, 73E, 122JAA, 122JG, 123BBA, 123BF, 124AMAA, 124GA, 124JD and 124PA, would have been included in assessable income; or

(d) that, apart from Subdivision 41-A of the Income Tax Assessment Act 1997 (Common rule 1 - roll-over relief for related entities), would have been included in assessable income.

(3) A reference in subsection 160ZH(1) to the amount of any consideration or the amount of any expenditure, in respect of an asset (the taxpayer's asset ), being a taxpayer's interest in a partnership asset of a partnership in which the taxpayer is a partner, is a reference to the sum of:

(a) the amount of the consideration or the amount of the expenditure, as the case may be (as worked out under section 160ZH); and

(b) any amount that is included in the assessable income of the partnership or of the taxpayer of any year of income by virtue of a provision of this Act other than this Part the effect of which is to reverse a deduction covered by paragraph (c) or subparagraph (d)(iii);

reduced by:

(c) any part of the consideration or of the expenditure that has been allowed or is allowable as a deduction to the partnership or the taxpayer in respect of any year of income; and

(d) for the purpose of the reference in paragraphs 160ZH(1)(a), (c) and (d):

(i) any amount of expenditure in relation to the asset that, apart from subsections 124ZB(4) and 124ZG(5), would have been allowed or allowable under Division 10C or 10D of Part III as a deduction to the partnership or the taxpayer, after the acquisition of the asset, in respect of any year of income; and

(ii) any amount that, apart from subsection 388-55(3) of the Income Tax Assessment Act 1997, would have been allowed or allowable under Subdivision 387-A or 387-B of that Act as a deduction to the partnership or the taxpayer, after the acquisition of the asset, in respect of any year of income; and

(iii) any amount of expenditure that, apart from paragraph 43-70(2)(h) of the Income Tax Assessment Act 1997, would have been allowed or allowable under Division 43 of that Act as a deduction to the taxpayer, after the acquisition of the asset, in respect of any year of income; and

(iv) any other expenditure that is capital expenditure by the partnership, taxpayer or any other person in respect of the asset that has been allowed or is allowable as a deduction to the partnership or the taxpayer, after the acquisition of the asset, in respect of any year of income.

(4) The reference in paragraph (3)(b) to an amount that is included in the assessable income of the partnership or the taxpayer includes a reference to an amount:

(a) that is taken by subsection 60(1A) of this Act to be so included for the asset for the purposes of subsection 60(1); or

(b) that is treated as being deducted for depreciation of another asset under section 42-285 or 42-290 of the Income Tax Assessment Act 1997; or

(c) that, apart from roll-over relief under sections 58, 73E, 122JAA, 122JG, 123BBA, 123BF, 124AMAA, 124GA, 124JD and 124PA, would have been included in assessable income; or

(d) that, apart from Subdivision 41-A of the Income Tax Assessment Act 1997 (Common rule 1 - roll-over relief for related entities), would have been included in assessable income.

160ZJB Reduction of amounts for purposes of indexed cost base

(1) A reference in subsection 160ZH(2) to the indexed amount of any consideration or the indexed amount of any expenditure, in respect of an asset (other than the taxpayer's interest in a partnership asset of a partnership in which the taxpayer is a partner) is a reference to the sum of:

(a) the indexed amount of the consideration or the indexed amount of the expenditure (as worked out under sections 160ZH and 160ZJ), as the case may be; and

(b) any amount that is included in the assessable income of the taxpayer of any year of income by virtue of a provision of this Act other than this Part the effect of which is to reverse a deduction covered by paragraph (c) or subparagraph (d)(iii);

reduced by:

(c) any part of the consideration or of the expenditure that has been allowed or is allowable as a deduction to the taxpayer in respect of any year of income; and

(d) for the purpose of the reference in paragraphs 160ZH(2)(a), (c) and (d):

(i) any amount of expenditure in relation to the asset that, apart from subsections 124ZB(4) and 124ZG(5), would have been allowed or allowable under Division 10C or 10D of Part III as a deduction to the taxpayer, after the acquisition of the asset, in respect of any year of income; and

(ii) any amount that, apart from subsection 388-55(3) of the Income Tax Assessment Act 1997, would have been allowed or allowable under Subdivision 387-A or 387-B of that Act as a deduction to the taxpayer, after the acquisition of the asset, in respect of any year of income; and

(iii) any amount of expenditure that, apart from paragraph 43-70(2)(h) of the Income Tax Assessment Act 1997, would have been allowed or allowable under Division 43 of that Act as a deduction to the taxpayer, after the acquisition of the asset, in respect of any year of income; and

(iv) any other expenditure that is capital expenditure by the taxpayer or any other person in respect of the asset that has been allowed or is allowable as a deduction to the taxpayer, after the acquisition of the asset, in respect of any year of income.

(2) The reference in paragraph (1)(b) to an amount that is included in the assessable income of a taxpayer includes a reference to an amount:

(a) that is taken by subsection 60(1A) of this Act to be so included for the asset for the purposes of subsection 60(1); or

(b) that is treated as being deducted for depreciation of another asset under section 42-285 or 42-290 of the Income Tax Assessment Act 1997; or

(c) that, apart from roll-over relief under sections 58, 73E, 122JAA, 122JG, 123BBA, 123BF, 124AMAA, 124GA, 124JD, and 124PA, would have been included in assessable income; or

(d) that, apart from Subdivision 41-A of the Income Tax Assessment Act 1997 (Common rule 1 - roll over relief for related entities), would have been included in assessable income.

(3) A reference in subsection 160ZH(2) to the indexed amount of any consideration or the indexed amount of any expenditure, in respect of an asset (the taxpayer's asset ), being a taxpayer's interest in a partnership asset of a partnership in which the taxpayer is a partner, is a reference to the sum of:

(a) the indexed amount of the consideration or the indexed amount of the expenditure (as worked out under sections 160ZH and 160ZJ), as the case may be; and

(b) any amount that is included in the assessable income of the partnership or of the taxpayer of any year of income by virtue of a provision of this Act other than this Part the effect of which is to reverse a deduction covered by paragraph (c) or subparagraph (d)(iii);

reduced by:

(c) any part of the consideration or of the expenditure that has been allowed or is allowable as a deduction to the partnership or the taxpayer in respect of any year of income; and

(d) for the purpose of the reference in paragraphs 160ZH(2)(a), (c) and (d):

(i) any amount of expenditure in relation to the asset that, apart from subsections 124ZB(4) and 124ZG(5), would have been allowed or allowable under Division 10C or 10D of Part III as a deduction to the partnership or the taxpayer, after the acquisition of the asset, in respect of any year of income; and

(ii) any amount that, apart from subsection 388-55(3) of the Income Tax Assessment Act 1997, would have been allowed or allowable under Subdivision 387-A or 387-B of that Act as a deduction to the partnership or the taxpayer, after the acquisition of the asset, in respect of any year of income; and

(iii) any amount of expenditure that, apart from paragraph 43-70(2)(h) of the Income Tax Assessment Act 1997, would have been allowed or allowable under Division 43 of that Act as a deduction to the taxpayer, after the acquisition of the asset, in respect of any year of income; and

(iv) any other expenditure that is capital expenditure by the partnership, taxpayer or any other person in respect of the asset that has been allowed or is allowable as a deduction to the partnership or the taxpayer, after the acquisition of the asset, in respect of any year of income.

(4) The reference in paragraph (3)(b) to an amount that is included in the assessable income of the partnership or the taxpayer includes a reference to an amount:

(a) that is taken by subsection 60(1A) of this Act to be so included for the asset for the purposes of subsection 60(1); or

(b) that is treated as being deducted for depreciation of another asset under section 42-285 or 42-290 of the Income Tax Assessment Act 1997; or

(c) that, apart from roll-over relief under sections 58, 73E, 122JAA, 122JG, 123BBA, 123BF, 124AMAA, 124GA, 124JD and 124PA, would have been included in assessable income; or

(d) that, apart from Subdivision 41-A of the Income Tax Assessment Act 1997 (Common rule 1 - roll-over relief for related entities), would have been included in assessable income.