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-E - Low-value and software development pools  

Operative provisions

SECTION 40-425   Allocating assets to a low-value pool  

40-425(1)  
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.

40-425(3)  
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.

40-425(6)  
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). Exception: R & D

40-425(8)  


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.
Note:

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 ).


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