Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 40.35

  (1)   This Division and the provisions referred to in subsection   (3) apply to a * depreciating asset (the underlying asset ) that you * hold, and that is also held by one or more other entities, as if your interest in the underlying asset were itself the underlying asset.

Note:   Partners do not hold partnership assets: see section   40 - 40.

  (2)   As a result, the decline in value of the underlying asset is not itself taken into account.

Example:   Buford Corp owns an office block that it leases to 2 companies, Smokey Pty Ltd and Bandit Pty Ltd. Smokey and Bandit decide to install a fountain in front of the building.

  They discuss it with Buford who agrees to pay half the cost (because the fountain won't be removable at the end of the lease). Smokey and Bandit split the rest of the cost between them.

  Smokey and Bandit would each hold the asset under item   3 of the table in section   40 - 40 and Buford would hold it under item   10. They would be joint holders, so each would write - off its interest in the fountain.

  (3)   The provisions are:

  (a)   Divisions   41, 328 and 775 of this Act; and

  (b)   Divisions   40 and 328 of the Income Tax (Transitional Provisions) Act 1997 .