Income Tax Assessment Act 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-1 - ASSESSABLE INCOME  

Division 20 - Amounts included to reverse the effect of past deductions  

Subdivision 20-B - Disposal of a car for which lease payments have been deducted  

Previous disposals of the car

SECTION 20-140   20-140   Reducing the amount to be included if there has been an earlier disposal  


Each limit on the amount to be included in your assessable income because of your disposal of the * car is reduced if, after the lease period began and before your disposal, the car, or an interest in it, was disposed of in one of these situations:


Reducing each limit on the amount to be included
Item In this situation: reduce each limit by:
1 Section 20-110 or 20-125 included an amount in your assessable income in respect of such an earlier disposal by you that amount
.
2 Section 20-110 or 20-125 included an amount in another entity's assessable income in respect of such an earlier disposal by the other entity that amount
.
3 Section 20-110 or 20-125 would have included an amount in your assessable income in respect of such an earlier disposal by you but for the operation of section 20-145 that amount
.
4 Section 20-110 or 20-125 would have included an amount in another entity's assessable income in respect of such an earlier disposal by the other entity but for the operation of section 20-145 that amount
.
5 Section 20-150 reduced the amount to be included in your assessable income in respect of such an earlier disposal by you the amount of the reduction
.
6 Section 20-150 reduced the amount to be included in another entity's assessable income in respect of such an earlier disposal by the other entity the amount of the reduction

Examples:

Your associate leases a car for 5 years and then acquires it. Your associate disposes of it to you and section 20-110 includes $500 in your associate's assessable income.

You later dispose of the car.

In working out the amount to include in your assessable income for your disposal, you can reduce each limit in subsection 20-125(2) by $500 because the disposal by your associate occurred after the lease period began.

Contrast this case:

You lease a car for 5 years and then acquire it. You dispose of it to another entity and section 20-110 includes $1,000 in your assessable income.

You lease the car from that entity for 2 years and then acquire it. You later dispose of it.

In working out the amount to include in your assessable income in respect of the second lease, you cannot reduce each limit in subsection 20-110(2) by $1,000 because the first disposal did not occur after the start of that lease.

Note:

If the earlier disposal occurred in the 1996-97 income year or an earlier income year, each limit may be able to be reduced by a further amount: see section 20-115 of the Income Tax (Transitional Provisions) Act 1997 .


 

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