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 40-190   Second element of cost  

40-190(1)  
The second element is worked out after you start to * hold the * depreciating asset.

40-190(2)  


The second element is:


(a) the amount you are taken to have paid under section 40-185 for each economic benefit that has contributed to bringing the asset to its present condition and location from time to time since you started to * hold the asset; and


(b) expenditure you incur that is reasonably attributable to a * balancing adjustment event occurring for the asset.

Example 1:

Andrew adds a new tray and canopy to his ute. The materials and labour that go into the addition are economic benefits that Andrew received and that contribute to the ute ' s present condition.

The payments he makes for those economic benefits are included in the second element of the ute ' s cost.

Example 2:

Leonie needed to replace one of her old depreciating assets that was fixed to her land with a new, more efficient one. Leonie paid a contractor a fee to demolish and remove the old asset. This resulted in a balancing adjustment event occurring for the old asset, and the fee forms part of the second element of the cost of the old asset that was demolished.

Note:

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

40-190(2A)  


Paragraph (2)(b) does not apply to a * balancing adjustment event referred to in item 6 or 11 of the table in subsection 40-300(2) .

40-190(3)  
However, the second element is worked out using this table if an item in it applies. Use the last applicable item.


Second element of the cost of a depreciating asset
Item In this case: The second element of cost is:
1 You received the benefit under an *arrangement and: The market value of the benefit when you received 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 second element of cost for the benefit would exceed its *market value
.
2 You received the benefit under an *arrangement that was private or domestic in nature to you The *market value of the benefit when you received it


 

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.