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Edited version of your written advice
Authorisation Number: 1012831663688
Date of advice: 3 July 2015
Ruling
Subject: The application or otherwise of Division 43 and Division 40 of the Income Tax Assessment Act 1997
1. Upon completion of the Transaction, will the Entity be entitled to deduct under section 43-10 any of the amount paid for the fair market value of assets on the expiration of the Lease?
2. Upon completion of the Transaction, will either subsection 43-50(1) or subsection 43-50(2) apply to any of the amount paid for the fair market value of assets, on the expiration of the Lease?
3. Is the asset a depreciating asset within the meaning given by section 40-30?
4. Upon completion of the Transaction, in relation to the amount paid for the fair market value of assets, on the expiration of the Lease, will the Entity hold each of those depreciating assets under item 2 or item 10 of the table in section 40-40?
5. Upon completion of the Transaction, in relation to the amount paid for the fair market value of assets, on the expiration of the Lease, will subsection 40-45(2) apply to those assets in relation to the Entity?
6. Upon completion of the Transaction, in relation to the amount paid for the fair market value of assets on the expiration of the Lease, will the total of the first element of cost of those depreciating assets worked out under section 40-180 and section 40-185 equal the amount paid for the fair market value of those assets?
Decision
The Commissioner ruled that:
1. No. The Entity will not be entitled to deduct any of the amount paid for the fair market value of assets on the expiration of the Lease under subsection 43-10.
2. No. Neither subsection 43-50(1) nor subsection 43-50(2) will apply to any of the amount paid for the fair market value of assets, on the expiration of the Lease.
3. Yes. The asset is a depreciating asset within the meaning given by section 40-30.
4. Yes. The Entity will hold each of those assets that are depreciating assets under item 2 or item 10 of the table in section 40-40.
5. No. Subsection 40-45(2) will not apply to those assets in relation to the Entity.
6. Yes. The total of the first element of cost, of those assets that are depreciating assets, worked out under section 40-180 and section 40-185 will equal the amount paid for the fair market value of those assets.