Income Tax Assessment Act 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-5 - RULES ABOUT DEDUCTIBILITY OF PARTICULAR KINDS OF AMOUNTS  

Division 25 - Some amounts you can deduct  

Operative provisions  

SECTION 25-110   Capital expenditure to terminate lease etc.  

25-110(1)  
You can deduct an amount for capital expenditure you incur to terminate a lease or licence (including an authority, permit or quota) that results in the termination of the lease or licence if the expenditure is incurred:


(a) in the course of carrying on a * business; or


(b) in connection with ceasing to carry on a business.

25-110(2)  
The amount you can deduct is 20% of the expenditure:


(a) for the income year in which the lease or licence is terminated; and


(b) for each of the next 4 income years. Exceptions

25-110(3)  
You cannot deduct any amount for expenditure you incur to terminate a lease that, in accordance with * accounting standards, or statements of accounting concepts made by the Australian Accounting Standards Board, is classified as a finance lease.

25-110(4)  
If you incurred the expenditure under an * arrangement and:


(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 subsection, the amount of the expenditure would be more than the * market value of what it was for (assuming the termination did not occur and was never proposed to occur);

the amount of expenditure you take into account is that market value.

25-110(5)  
You cannot deduct any amount for expenditure you incur to terminate a lease or licence if:


(a) after the termination, you or an * associate of yours enters into another lease or licence with the same party or an associate of that party; and


(b) the other lease or licence is of the same kind as the original one.

25-110(6)  
You cannot deduct any amount for expenditure you incur to terminate a lease or licence to the extent that the expenditure is for the granting or receipt of another lease or licence in relation to the asset that was the subject of the original lease or licence.


 

Disclaimer and notice of copyright applicable to materials provided by CCH Australia Limited

CCH Australia Limited ("CCH") believes that all information which it has provided in this site is accurate and reliable, but gives no warranty of accuracy or reliability of such information to the reader or any third party. The information provided by CCH is not legal or professional advice. To the extent permitted by law, no responsibility for damages or loss arising in any way out of or in connection with or incidental to any errors or omissions in any information provided is accepted by CCH or by persons involved in the preparation and provision of the information, whether arising from negligence or otherwise, from the use of or results obtained from information supplied by CCH.

The information provided by CCH includes history notes and other value-added features which are subject to CCH copyright. No CCH material may be copied, reproduced, republished, uploaded, posted, transmitted, or distributed in any way, except that you may download one copy for your personal use only, provided you keep intact all copyright and other proprietary notices. In particular, the reproduction of any part of the information for sale or incorporation in any product intended for sale is prohibited without CCH's prior consent.