ATO Interpretative Decision

ATO ID 2002/634 (Withdrawn)

Income Tax

Balancing Adjustment Roll-Over Relief for post CGT 'loss' assets
FOI status: may be released

This ATO ID is withdrawn as it does not reflect the ATO view due to legislative changes contained in the New Business Tax System (Consolidation) Act (No. 1) 2002.

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Is rollover relief available under Subdivision 41-A of the Income Tax Assessment Act 1997 (ITAA 1997) where Company A disposes of a unit of plant, acquired after 20 September 1985, to Company B, which is part of the same wholly owned group, and the disposal gives rise to a balancing adjustment deduction under section 42-195 of the ITAA 1997?

Decision

No. The roll-over relief available under Subdivision 41-A of the ITAA 1997 is not available in respect of the disposal of plant that was acquired after 20 September 1985 as the same asset roll-over relief under Subdivision 126-B of the ITAA 1997 is not available to Company A.

Facts

Company A is a member of a wholly-owned group of Australian resident companies that also includes Company B. Company A has a unit of plant that it acquired after 20 September 1985. It disposed of the unit of plant to company B during the income year ended 30 June 2001. The market value of the unit of plant at the time of disposal was $30,000. The undeducted cost of the unit at the time of sale was $50,000. As a result of the disposal Company A becomes entitled to a deduction of $20,000 under section 42-195 of the ITAA 1997.

Reasons for Decision

Subdivision 41-A of the ITAA 1997 provides roll-over relief for the disposal of plant between Australian resident companies within the same wholly-owned group if same asset roll-over is available under Subdivision 126-B of the ITAA 1997.

Same asset roll-over is available under Subdivision 126-B if both companies choose to obtain it and

•: the company disposing of the asset makes a capital gain or does not make a capital loss and is not entitled to a deduction (subparagraph 126- 55(1)(a)(i) of the ITAA 1997); or
•: the company disposing of the asset acquired it before 20 September 1985 (subparagraph 126- 55(1)(a)(ii) of the ITAA 1997).

Where assets acquired after 20 September 1985 are transferred between wholly owned Australian companies for an amount less than the undeducted cost, a deduction is available under 42-195 of the ITAA 1997 to the originating company, in this case company A. Accordingly, same asset roll-over is not available.

Date of decision: 11 March 2002

Year of income: Year ended 30 June 2001

Legislative References:
Income Tax Assessment Act 1997
   Subdivision 41-A
   section 41-14
   section 41-20
   paragraph 41-20(1)(c)
   section 42-195
   Subdivision 126-B
   subsection 126-55(1)
   subparagraph 126- 55(1)(a)(i)
   subparagraph 126- 55(1)(a)(ii)

Keywords
Group company transfers
Group company loss transfers
Balancing adjustment rollover relief
Capital Allowances CoE
Additional balancing adjustment amount
Balancing adjustment event
Balancing adjustment offset

Business Line: Centres of Expertise Capital Allowances

Date of publication: 6 June 2002

ISSN: 1445-2782

history

	Date:	Version:
	11 March 2002	Original statement
You are here	3 November 2006	Archived

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