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-C - Cost  

Operative provisions

SECTION 40-180   First element of cost  

40-180(1)  


The first element is worked out as at the time when you began to *hold the *depreciating asset (except for a case to which item 3, 4 or 14 of the table in subsection (2) applies). It is:


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


(b) otherwise - the amount you are taken to have paid to hold the asset under section 40-185 .

Note 1:

The first element of the cost may be modified by a later provision in this Subdivision.

Note 2:

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.

40-180(2)  


If more than one item in this table covers the asset, apply the last item that covers it.


First element of the cost of a depreciating asset
Item In this case: The cost is:
1 A *depreciating asset you *hold is split into 2 or more assets For each of the assets into which it is split, the amount worked out under section 40-205
.
2 A *depreciating asset or assets that you *hold is or are merged into another depreciating asset For the other asset, the amount worked out under section 40-210
.
3 A *balancing adjustment event happens to a *depreciating asset you *hold because you stop using it for any purpose expecting never to use it again, and you continue to hold it The *termination value of the asset at the time of the event
.
4 A *balancing adjustment event happens to a *depreciating asset you *hold but have not used because you expect never to use it, and you continue to hold it The *termination value of the asset at the time of the event
.
5 A partnership asset that was *held, just before it became a partnership asset, by one or more partners (whether or not any other entity was a joint holder) or a partnership asset to which subsection 40-295(2) applies The *market value of the asset when the partnership started to hold it or when the change referred to in subsection 40-295(2) occurred
.
6 There is roll-over relief under section 40-340 for a *balancing adjustment event happening to a *depreciating asset The *adjustable value of the asset to the transferor just before the balancing adjustment event occurred
.
7 You are the legal owner of a *depreciating asset that is hired under a *hire purchase agreement and you start *holding it because the entity to whom it is hired does not become the legal owner The *market value of the asset when you started to hold it
.
8 You started to *hold the asset under an *arrangement and: The market value of the asset when you started to hold 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 first element of the asset ' s cost would exceed its *market value
.
9 You started to *hold the asset under an *arrangement that was private or domestic in nature to you (for example, a gift) The *market value of the asset when you started to hold it
.
10 The *Finance Minister has determined a cost for you under section 49A, 49B, 50A, 50B, 51A or 51B of the Airports (Transitional) Act 1996 The cost so determined
.
11 To which Division 58 (which deals with assets previously owned by an *exempt entity) applies The amount applicable under subsections 58-70(3) and (5)
.
12 A *balancing adjustment event happens to a *depreciating asset because a person dies and the asset devolves to you as the person ' s *legal personal representative The asset ' s *adjustable value on the day the person 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 the person died as is reasonably attributable to the asset
.
13 You started to *hold a *depreciating asset because it *passed to you as the beneficiary or a joint tenant The *market value of the asset when you started to hold it reduced by any *capital gain that was disregarded under section 128-10 or subsection 128-15(3), whether by the deceased or by the *legal personal representative
.
14 A *balancing adjustment event happens to a *depreciating asset you *hold because of 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

40-180(3)  


The first element of *cost includes an amount you paid or are taken to have paid in relation to starting to *hold the *depreciating asset if that amount is directly connected with holding the asset.

40-180(4)  


The first element of *cost of a *depreciating asset does not include an amount that forms part of the second element of cost of another depreciating asset.
Note:

The first element of cost may be reduced under section 40-1130 to account for exploration benefits received under farm-in farm-out arrangements.


 

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.