Commonwealth Consolidated Acts

NEW BUSINESS TAX SYSTEM (MISCELLANEOUS) ACT (NO. 1) 2000 - SCHEDULE 6

Income Tax Assessment Act 1997

1   Section   10 - 5 (table item headed "depreciation")

Repeal the item, substitute:

2   Subsection 42 - 20(1)

After " * pool", insert "or a * low - value pool".

3   Subsection 42 - 20(1)

After "Subdivision   42 - L", insert "or Subdivision   42 - M".

4   At the end of subsection 42 - 30(2)

Add:

  ; or (d)   section   42 - 475 for plant in a * low - value pool.

5   After subsection 42 - 90(3)

Insert:

  (3A)   If the last entity had the * plant in a * low - value pool for the income year in which the * balancing adjustment event occurred, its cost may be limited to its * termination value.

6   Section   42 - 167

Repeal the section, substitute:

42 - 167   Plant whose cost does not exceed $300

  (1)   Despite sections   42 - 160 and 42 - 165, your deduction is the * plant's * cost for the income year in which you become its owner or * quasi - owner if:

  (a)   that cost does not exceed $300; and

  (b)   you:

  (i)   became the owner or quasi - owner of the plant under a contract entered into before 1   July 2000; or

  (ii)   constructed it and the construction started before that day; or

  (iii)   acquired it in some other way before that day.

  (2)   Despite sections   42 - 160 and 42 - 165, your deduction is the * plant's * cost for the income year in which you become its owner or * quasi - owner (regardless of when you acquired or constructed it) if:

  (a)   that cost does not exceed $300; and

  (b)   you are a * small business taxpayer for that income year.

7   At the end of Division   42

Add:

Subdivision   42 - M -- Low - value pools

Guide to Subdivision   42 - M

42 - 445   What this Subdivision is about

This Subdivision allows you to calculate your depreciation deductions for certain plant through a low - value pool.

Table of sections

Operative provisions

42 - 450   Creating a low - value pool

42 - 455   Allocating plant to low - value pools

42 - 460   Rules for plant in low - value pools

42 - 465   Private or exempt use of plant

42 - 470   Deductions for plant in low - value pools

42 - 475   Balancing adjustment events

[This is the end of the Guide.]

Operative provisions

42 - 450   Creating a low - value pool

    You may choose to create a low - value pool by recording in writing the first income year in which you allocate * plant to it.

42 - 455   Allocating plant to low - value pools

  (1)   You may choose to allocate * low - cost plant to a * low - value pool for the income year in which you become its owner or * quasi - owner.

  (2)   Low - cost plant is * plant whose * cost is less than $1,000.

  (3)   You may also choose to allocate * plant to a * low - value pool for an income year if:

  (a)   you have deducted or can deduct an amount for depreciation of the plant for a previous income year using the * diminishing value method; and

  (b)   the * undeducted cost of the plant at the start of the income year is less than $1,000.

42 - 460   Rules for plant in low - value pools

  (1)   Once you have made a choice to allocate * low - cost plant to a * low - value pool for an income year, you must allocate all low - cost plant of which you become the owner or * quasi - owner in that income year or a later one to such a pool.

  (2)   However, you cannot allocate any * plant to a * low - value pool for an income year if you are a * small business taxpayer for that year.

  (3)   Once you allocate * plant to a * low - value pool, it must remain in the pool.

  (4)   You cannot allocate * low - cost plant to a * low - value pool if:

  (a)   its * cost does not exceed $300; and

  (b)   you:

  (i)   became the owner or * quasi - owner of the plant under a contract entered into before 1   July 2000; or

  (ii)   constructed it and the construction started before that day; or

  (iii)   acquired it in some other way before that day.

  (5)   You cannot allocate * plant to a * low - value pool if you have allocated it to a pool under Subdivision   42 - L.

42 - 465   Private or exempt use of plant

  (1)   When you allocate * plant to a * low - value pool, you must make an estimate of the percentage (if any) of your proposed use of the plant that will be for purposes other than the * purpose of producing assessable income.

  (2)   For * low - cost plant, you must reduce its * cost by an amount representing the percentage (if any) you estimated for it under subsection   ( 1).

  (3)   For * plant referred to in subsection 42 - 455(3), you must reduce its * undeducted cost at the start of the income year by that percentage.

42 - 470   Deductions for plant in low - value pools

  (1)   You calculate your depreciation deduction for * plant in a * low - value pool for an income year in this way:

  (a)   take 18 3 / 4 % of the * costs of * low - cost plant you allocated to the pool for that year; and

  (b)   add to it 37 1 / 2 % of the sum of:

  (i)   the * pool closing balance for the previous income year; and

  (ii)   the * undeducted costs of plant, at the start of the income year, that you allocated to the pool for that year under subsection 42 - 455(3).

  (2)   The pool closing balance of a * low - value pool for an income year is the sum of:

  (a)   the * pool closing balance of the pool for the previous income year; and

  (b)   the * costs of * low - cost plant you allocated to the pool for that year; and

  (c)   the * undeducted costs of any * plant you allocated to the pool for that year under subsection 42 - 455(3) as at the start of that year;

less the depreciation deductions for the pool worked out under subsection   ( 1).

Note:   The pool closing balance may be reduced under section   42 - 475 if a balancing adjustment event happens.

42 - 475   Balancing adjustment events

  (1)   If a * balancing adjustment event happens to * plant in a * low - value pool in an income year, the * pool closing balance for that year is reduced by the * termination value of the plant.

  (2)   If you had made an estimate for that * plant under section   42 - 465, the * pool closing balance for that year is reduced by that part of the * termination value of the plant that represents the percentage of your use of the plant you estimated would be for the * purpose of producing assessable income.

  (3)   If the sum of the * termination values, or the part of it, applicable under subsection   ( 1) or (2) exceeds the * pool closing balance of the pool for that year, the excess is included in your assessable income.

8   Section   46 - 60

After "Subdivision   42 - L", insert "or Subdivision   42 - M".

9   Subsection 995 - 1(1)

Insert:

"low-cost plant" has the meaning given by section   42 - 455.

10   Subsection 995 - 1(1)

Insert:

"low-value pool" has the meaning given by section   42 - 450.

11   Subsection 995 - 1(1)

Insert:

"pool closing balance" has the meaning given by section   42 - 470.

Income Tax Assessment Act 1936

12   Subsection 102AAZ(3)

Omit "Subdivision   42 - L", substitute "Subdivisions   42 - L and 42 - M".

13   Section   317 (definition of depreciation provision )

Omit "Subdivision   42 - L", substitute "Subdivisions   42 - L and 42 - M".

14   Subsection 398(3)

Omit "Subdivision   42 - L", substitute "Subdivisions   42 - L and 42 - M".

15   Application of amendments

(1)   The amendments made by this Schedule, to the extent that they relate to:

  (a)   plant whose cost does not exceed $300; or

  (b)   low - cost plant (plant whose cost is less than $1,000);

apply to assessments for the income year in which 1   July 2000 occurs and later income years.

(2)   The amendments made by this Schedule, to the extent that they relate to plant that you can allocate to a low - value pool under subsection 42 - 455(3) of the Income Tax Assessment Act 1997 , apply to assessments for the 2000 - 01 income year and later income years.

Notes to the New Business Tax System (Miscellaneous) Act (No. 1) 2000

Note 1

The New Business Tax System (Miscellaneous) Act (No.   1) 2000 as shown in this compilation comprises Act No.   79, 2000 amended as indicated in the Tables below.

Table of Acts

Table of Amendments