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Edited version of private advice
Authorisation Number: 1051712584392
Date of advice: 8 July 2020
Ruling
Subject: The application of Division 43 and Division 40 of the Income Tax Assessment Act 1997
Question 1
Upon completion of the Transaction, is the Entity 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?
Answer
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.
Question 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?
Answer
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.
Question 3
Are the assets that form part of the Transaction, depreciating assets within the meaning given in section 40-30?
Answer
Yes. The assets are depreciating assets within the meaning given by section 40-30.
Question 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 subsection 40-45(2) apply to those assets in relation to the Entity?
Answer
No. Subsection 40-45(2) will not apply to those assets in relation to the Entity.
Question 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 the Entity hold each of those depreciating assets under item 2 or item 10 of the table in section 40-40?
Answer
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.
Question 6
Will subsection 40-25(2) apply to reduce any deductions available to the Entity in relation to the assets?
Answer
No. Subsection 40-25(2) will not apply to reduce any deductions available to the Entity in relation to the assets.
Question 7
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 as reasonably attributed to each asset under section 40-195?
Answer
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 as reasonably attributed to each asset under section 40-195.
This ruling applies for the following periods:
Year ended 30 June 20XX
The scheme commences on:
1 July 20XX