INCOME TAX ASSESSMENT 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-D - Balancing adjustments  

Operative provisions

SECTION 40-300   Meaning of termination value  

40-300(1)  
The termination value of a * depreciating asset is worked out as at the time when the * balancing adjustment event occurs. It is:


(a) if an item in the table in subsection (2) applies - the amount specified in that item; or


(b) otherwise - the amount you are taken to have received under section 40-305 for the asset.

Note:

Section 230-505 provides special rules for working out the amount of consideration for an asset if the asset is a Division 230 financial arrangement or a Division 230 financial arrangement is involved in that consideration.

40-300(2)  


If more than one item applies, use the value under the last applicable item.


Termination value table
Item For this balancing adjustment event: The termination value is:
1 You stop using a *depreciating asset, or having it *installed ready for use, for any purpose and you expect never to use it again even though you still *hold it The *market value of the asset when you stopped using it or having it *installed ready for use
.
2 You decide never to use a *depreciating asset that you have not used even though you still *hold it The *market value of the asset when you make the decision
.
3 You stop using *in-house software for any purpose and you expect never to use it again even though you still *hold it Zero
.
4 You decide never to use *in-house software that you have not used even though you still *hold it Zero
.
5 One or more partners stop holding a *depreciating asset when it becomes a partnership asset or a *balancing adjustment event referred to in subsection 40-295(2) occurs The *market value of the asset when the partnership started to *hold it or when the balancing adjustment event occurred
.
6 You stop *holding a *depreciating asset under an *arrangement and: The market value of the asset just before you stopped holding it
(a) there is at least one other party to the arrangement with whom you did not deal at *arm ' s length; and
(b) apart from this item, the *termination value would be less than its *market value
.
7 You stop *holding a *depreciating asset under an *arrangement that was private or domestic in nature to you (for example, a gift) The *market value of the asset just before you stopped *holding it
.
8 A *depreciating asset is lost or destroyed The amount or value received or receivable under an insurance policy or otherwise for the loss or destruction
.
9 You stop *holding a *depreciating asset because you die and the asset starts being held by the *legal personal representative The asset ' s *adjustable value on the day you died or, if the asset is allocated to a low-value pool, so much of the *closing pool balance for the income year in which you died as is reasonably attributable to the asset
.
10 You stop *holding a *depreciating asset because it *passes directly to a beneficiary or joint tenant when you die The *market value of the asset on the day you die
.
11 A *depreciating asset for which the *Finance Minister has determined an amount for you under section 52A of the Airports (Transitional) Act 1996 The amount so determined
.
12 (Repealed by No 96 of 2014)
13 The *balancing adjustment event occurs under subsection 40-295(1A) Zero
14 The *balancing adjustment event occurs under subsection 40-295(1B) What would, apart from subsection 40-285(3), be the asset ' s *adjustable value on the day the *balancing adjustment event occurs

40-300(3)  


The termination value of a * depreciating asset does not include an amount that is included in assessable income as * ordinary income under section 6-5 or as * statutory income under section 6-10 (except an amount that is statutory income under this Division).
Note 1:

Termination value may be adjusted under Subdivision 27-B so that any GST consequences are accounted for.

Note 2:

Termination value may be reduced under section 40-1105 to account for exploration benefits received under farm-in farm-out arrangements.


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