Commonwealth Consolidated Acts Commonwealth Consolidated Acts
Income Tax Assessment Act 1936
1 Subsection 57 - 85(3) of Schedule 2D (table items 10 and 11)
Before "40 - I", insert "40 - B or".
2 Section 57 - 130 of Schedule 2D
Omit "Subdivision 57 - I", substitute "Subdivisions 57 - I and 57 - J".
3 At the end of section 57 - 130 of Schedule 2D
Add:
(2) Despite subsection ( 1), Subdivision 57 - J applies for the purposes of section 40 - 35 of the Income Tax (Transitional Provisions) Act 1997 to capital expenditure incurred by a transition taxpayer before 1 July 2001 that relates to property that is not a depreciating asset.
Income Tax Assessment Act 1997
4 Subsection 27 - 80(3A)
After " * opening adjustable value for an income year", insert "and its * cost".
5 Paragraph 27 - 80(3A)(d)
Repeal the paragraph, substitute:
(d) the entity can deduct amounts for the asset under Division 40 or 328.
The reduction is the amount of the input tax credit.
6 Subsection 27 - 80(4)
After " * opening adjustable value for an income year", insert "and its * cost".
7 Subsection 27 - 80(5)
Omit "or (4)", substitute ", (3A) or (4)".
8 Paragraph 27 - 80(5)(b)
Omit " subsection ( 4)", substitute " subsection ( 3A) or (4)".
9 Subsection 27 - 85(3)
After " * opening adjustable value for an income year", insert "and its * cost".
10 At the end of subsection 27 - 87(1)
Add:
; and (c) section 27 - 95 does not apply to the entity in relation to the asset.
11 Subsection 27 - 90(3)
After " * opening adjustable value for an income year", insert "and its * cost".
12 Subsection 27 - 105(5)
Repeal the subsection, substitute:
(5) If the entity is a partnership and partners in that partnership can deduct amounts under Division 40 because section 40 - 570 or 40 - 665 applies, an amount equal to the * input tax credit, the * decreasing adjustment or the * increasing adjustment is apportioned to each of the partners as set out in subsection 40 - 570(2) or 40 - 665(2).
13 Subsection 40 - 25(1) (note 2)
After "STS taxpayers", insert "both deduct and".
14 At the end of subsection 40 - 25(5) (before the note)
Add:
Despite subsection ( 1), you can continue to deduct an amount equal to the decline in value for an income year (as worked out under this Division) of such an asset even though you do not continue to * hold that asset.
15 Subsection 40 - 45(2)
Repeal the subsection, substitute:
Capital works
(2) This Division does not apply to capital works for which you can deduct amounts under Division 43, or for which you could deduct amounts under that Division:
(a) but for expenditure being incurred, or capital works being started, before a particular day; or
(b) had you used the capital works for a purpose relevant to those capital works under section 43 - 140.
Note: Section 43 - 20 lists the capital works to which that Division applies.
16 Subsections 40 - 50(1) and (2)
After "You cannot deduct an amount", insert ", or work out a decline in value,".
17 Paragraph 40 - 75(2)(c)
Omit "for which the asset's cost or * adjustable value", substitute "for which the asset's * opening adjustable value".
18 Paragraph 40 - 75(2)(d)
Repeal the paragraph.
19 Paragraph 40 - 75(2)(e)
Omit "adjustable value", substitute "opening adjustable value".
20 Paragraph 40 - 75(2)(f)
Omit " * opening adjustable value", substitute "opening adjustable value".
21 Paragraph 40 - 75(2)(f)
Omit "27 - 80(4)", substitute "27 - 80(3A) or (4)".
22 Subsection 40 - 75(4)
Repeal the subsection, substitute:
(4) The remaining effective life of a * depreciating asset is any period of its * effective life that is yet to elapse as at:
(a) the start of the change year; or
(b) in the case of a roll - over under section 40 - 340--the time when the * balancing adjustment event occurs for the transferor.
Note: Effective life is worked out in years and fractions of years.
23 Subsection 40 - 85(2) (notes 1 and 2)
Repeal the notes, substitute:
Note: The opening adjustable value of a depreciating asset may be modified by one of these provisions:
24 At the end of section 40 - 175
Add:
Note: The cost of a depreciating asset may be modified by one of these provisions:
25 Subsection 40 - 180(2) (table items 5 and 6)
Repeal the items, substitute:
5 | A partnership asset that was * held, just before it became a partnership asset, by one or more partners (whether or not any other entity was a joint holder) or a partnership asset to which subsection 40 - 295(2) applies | The * market value of the asset when the partnership started to hold it or when the change referred to in subsection 40 - 295(2) occurred |
6 | There is roll - over relief under section 40 - 340 for a * balancing adjustment event happening to a * depreciating asset | The * adjustable value of the asset to the transferor just before the balancing adjustment event occurred |
26 Subsection 40 - 180(2) (table item 12)
Omit "The asset's * adjustable value at the time of death", substitute "The asset's * adjustable value on the day the person died or, if the asset is allocated to a low - value pool, so much of the * closing pool balance for the income year in which the person died as is reasonably attributable to the asset".
27 Subsection 40 - 215(1)
After "Division", insert "or Division 328".
28 Subsection 40 - 230(1)
After "section 40 - 225", insert "and Subdivision 27 - B".
29 At the end of section 40 - 230
Add:
(4) If you * hold a * car that is also held by one or more other entities, subsection ( 1) applies to the * cost of the car despite section 40 - 35. Then section 40 - 35 applies to the cost of the car as reduced under subsection ( 1).
30 Subsection 40 - 285(2) (note)
Omit "Note", substitute "Note 1".
31 At the end of subsection 40 - 285(2)
Add:
Note 2: The timing of a deduction allowed under this subsection is determined under Subdivision 170 - D where that Subdivision applies to the balancing adjustment event.
32 Paragraph 40 - 295(2)(b)
Omit "held", substitute "had an interest in".
33 Subsection 40 - 300(2) (table item 9)
Omit "The * adjustable value of the asset when you die", substitute "The asset's * adjustable value on the day you died or, if the asset is allocated to a low - value pool, so much of the * closing pool balance for the income year in which you died as is reasonably attributable to the asset".
34 Subsection 40 - 300(2) (table item 10)
Omit "just before", substitute "on the day".
35 At the end of section 40 - 300
Add:
(3) The termination value of a * depreciating asset does not include an amount that is included in assessable income as * ordinary income under section 6 - 5 or as * statutory income under section 6 - 10 (except an amount that is statutory income under this Division).
Note: Termination value may be adjusted under Subdivision 27 - B so that any GST consequences are accounted for.
36 Section 40 - 325
After " * car limit)", insert "after applying Subdivision 27 - B".
37 Paragraph 40 - 340(3)(b)
Omit " * held", substitute "had an interest in".
38 Subsection 40 - 365(5)
Repeal the subsection, substitute:
(5) For the purposes of applying this Act to the replacement asset:
(a) its * cost is reduced by the amount covered by the choice for the income year in which the asset's * start time occurs; and
(b) if the income year is later than the one in which the asset's * start time occurs--the sum of its * opening adjustable value for that later year and any amount included in the second element of the asset's cost for that later year is reduced by the amount covered by the choice.
39 Subsection 40 - 665(3)
Omit "this section", substitute "this Subdivision".
40 Paragraph 40 - 880(1)(a)
Omit "a * business", substitute "your * business structure".
41 At the end of paragraph 40 - 880(1)(a)
Add:
Example: You incorporate a company or create some other structure, such as a partnership or trust, through which your business will be carried on. The capital expenditure you incur in doing this is covered by this paragraph.
42 At the end of paragraph 40 - 880(1)(b)
Add:
Example: Michael and Sandra operate a fish shop in partnership. They agree to incorporate their business so they dispose of the partnership assets to a company. The capital expenses of incorporating the company and of transferring the partnership assets to it are covered by this paragraph.
43 At the end of paragraph 40 - 880(1)(c)
Add:
Example: CL Ltd wishes to issue shares for business expansion. The capital expenditure it incurs to prepare and issue a prospectus for this purpose is covered by this paragraph.
44 At the end of paragraph 40 - 880(1)(d)
Add:
Example: MH Limited has made an offer to take over AL limited. The capital expenditure incurred by AL Limited in complying with subsection 633(1) or 635(1) of the Corporations Act 2001 is covered by this paragraph.
45 At the end of paragraph 40 - 880(1)(e)
Add:
Example: MGP Ltd tried unsuccessfully to take over MM Ltd. Capital expenditure incurred by MGP in complying with subsection 633(1) or 635(1) of the Corporations Act 2001 is covered by this paragraph.
46 Paragraph 40 - 880(1)(g)
Omit "a business", substitute "your business".
47 At the end of paragraph 40 - 880(1)(g)
Add:
Example: You stop carrying on your business and, in doing this, you incur legal costs in terminating the services of your employees. This expenditure is covered by this paragraph.
48 Subsection 40 - 880(1)
Omit "is or was", substitute "is, was or will be".
49 At the end of subsection 40 - 880(3)
Add:
; or (d) it is in relation to a lease or other legal or equitable right; or
(e) it would, apart from this section, be taken into account in working out:
(i) a profit that is included in your assessable income (for example, under section 6 - 5 or 15 - 15); or
(ii) a loss that you can deduct (for example, under section 8 - 1 or 25 - 40); or
(f) it would, apart from this section, be taken into account in working out the amount of a * capital gain or * capital loss from a * CGT event; or
(g) it is specifically made non - deductible under another provision of this Act.
50 At the end of section 43 - 140
Add:
(2) This Division applies to an entity as if the entity used property for the * purpose of producing assessable income if the entity uses the property for:
(a) * environmental protection activities; or
(b) the environmental impact assessment of a project;
unless a provision of this Act expressly provides that that use is not for the purpose of producing assessable income.
51 Section 45 - 1
Omit "depreciation", substitute "the decline in value".
52 Paragraph 45 - 15(1)(a)
Omit "depreciation", substitute "the decline in value".
53 Paragraph 45 - 15(1)(b)
Omit "owned or was the * quasi - owner of", substitute " * held".
54 Paragraph 45 - 15(1)(c)
Omit "owned or was the quasi - owner of", substitute "held".
55 Subparagraph 45 - 20(1)(b)(ii)
Omit "owned or was the * quasi - owner of", substitute " * held".
56 Paragraph 45 - 20(1)(c)
Omit " * held", substitute "held".
57 Paragraph 45 - 35(2)(b)
Omit "depreciation", substitute "the decline in value".
58 Paragraph 45 - 35(3)(b)
Omit "depreciation", substitute "the decline in value".
59 Subsection 104 - 235(1A)
Repeal the subsection, substitute:
(1A) However, subsection ( 1) does not apply if:
(a) you are an eligible company (within the meaning of section 73B of the Income Tax Assessment Act 1936 ) and the * depreciating asset is a section 73BA depreciating asset (within the meaning of section 73BB of that Act); or
(b) there is roll - over relief for the * balancing adjustment event under section 40 - 340 of this Act; or
(c) the asset is one for which you or another entity has deducted or can deduct amounts under Subdivision 40 - F or 40 - G.
60 Paragraph 104 - 235(4)(b)
Omit "asset's decline in value", substitute "asset".
61 Subsection 106 - 5(5)
Repeal the subsection.
62 Paragraph 108 - 55(1)(b)
After "73B", insert "or 73BM".
63 Paragraph 108 - 55(1)(b)
After "73B", insert ", 73BF".
64 After paragraph 110 - 45(2)(a)
Insert:
(ab) the deduction is under Division 243; or
65 Subsection 115 - 20(1)
Repeal the subsection, substitute:
(1) To be a * discount capital gain, the * capital gain must have been worked out:
(a) using a * cost base that has been calculated without reference to indexation at any time; or
(b) for a capital gain that arose under * CGT event K7--using the * cost of the * depreciating asset concerned.
Note: A listed investment company must also calculate capital gains without reference to indexation in order to allow its shareholders to access the concessions in Subdivision 115 - D.
66 Section 116 - 25 (table item K7)
Repeal the item.
67 Section 118 - 24
Repeal the section, substitute:
(1) A * capital gain or * capital loss you make from a * CGT event (that is also a * balancing adjustment event) that happens to a * depreciating asset or a section 73BA depreciating asset (within the meaning of section 73BB of the Income Tax Assessment Act 1936 ) is disregarded if the asset was:
(a) an asset you * held; or
(b) if you are a partner, an asset of the partnership; or
(c) if you are absolutely entitled to the asset as against the trustee of a trust (disregarding any legal disability), an asset of the trustee;
where the decline in value of the asset was worked out under Division 40, or the deduction for the asset was calculated under Division 328, or would have been if the asset had been used.
(2) However, subsection ( 1) does not apply to:
(a) a * capital gain or * capital loss you make from * CGT event J2 or * CGT event K7 happening; or
(b) a * depreciating asset for which you or another entity has deducted or can deduct amounts under Subdivision 40 - F or 40 - G.
68 Paragraph 124 - 75(2)(a)
After " * depreciating asset", insert "whose decline in value is worked out under Division 40 or deductions for which are calculated under Division 328".
69 Subsection 124 - 75(5)
After " * depreciating asset", insert "whose decline in value is worked out under Division 40 or deductions for which are calculated under Division 328".
70 Subsection 124 - 80(2)
After " * depreciating asset", insert "whose decline in value is worked out under Division 40 or deductions for which are calculated under Division 328".
71 At the end of section 152 - 110
Add:
Exception
(3) However, subsection ( 2) does not apply to income * derived by a company or trust as a result of a * balancing adjustment event occurring to a * depreciating asset:
(a) whose decline in value is worked out under Division 40; or
(b) deductions for which are calculated under Division 328.
72 Subsection 328 - 175(6)
Omit "is intended", substitute "might reasonably be expected".
73 Subsection 328 - 180(1)
Omit "You cannot deduct any further amount for the asset.".
74 Subsection 328 - 180(2)
Repeal the subsection, substitute:
(2) You can also deduct for an income year for which you are an * STS taxpayer the * taxable purpose proportion of an amount included in the second element of the * cost of a * low - cost asset for which you have deducted an amount under subsection ( 1) if:
(a) the amount so included is less than $1,000; and
(b) you started to use the asset, or have it * installed ready for use, for a * taxable purpose during an earlier income year.
(3) A * low - cost asset for which you have deducted an amount under this section is allocated to your * general STS pool if:
(a) an amount of $1,000 or more is included in the second element of the asset's * cost; or
(b) any amount is included in the second element of the asset's cost and you have deducted or can deduct an amount under subsection ( 2) for an amount previously included in the second element of the asset's cost.
(4) This Division applies to the asset as if its * adjustable value were the amount included in the second element of its * cost as mentioned in subsection ( 3).
(5) Subsection ( 3) applies even if the amount is included in the second element of the asset's * cost when you are not an * STS taxpayer.
75 Subsection 328 - 225(3)
Omit "the end of", substitute "the beginning of".
76 Subsection 995 - 1(1) (after paragraph ( a) of the definition of capital allowance )
Insert:
(ab) Division 43 (capital works) of this Act; or
77 Subsection 995 - 1(1) (before paragraph ( b) of the definition of capital allowance )
Insert:
(ac) Subdivision 328 - D (capital allowances for STS taxpayers) of this Act; or
78 Subsection 995 - 1(1) ( paragraph ( b) of the definition of in - house software )
Omit "Division 40", substitute "Divisions 40 and 328".
Income Tax (Transitional Provisions) Act 1997
79 Paragraph 40 - 10(1)(a)
After " 2001 ", insert "and the New Business Tax System (Capital Allowances--Transitional and Consequential) Act 2001 ".
80 Subsection 40 - 10(2)
After " 2001 ", insert "and the New Business Tax System (Capital Allowances--Transitional and Consequential) Act 2001 ".
81 Paragraph 40 - 10(2)(b)
After "Act", insert ", or that you would have used if you had used the plant for the purpose of producing assessable income at the end of 30 June 2001".
82 Paragraph 40 - 20(1)(a)
After "former Act", insert "or you would have been able to deduct an amount for it under that Division if you had used it for the purpose of producing assessable income before 1 July 2001".
83 Paragraph 40 - 20(2)(a)
After "former Act", insert "or that you would have used if you had used the IRU for the purpose of producing assessable income before 1 July 2001".
84 Subsection 40 - 25(2)
After "former Act" (first occurring), insert "or for which you could have deducted amounts under that Subdivision if you had used the software for the purpose of producing assessable income before 1 July 2001".
85 Subsection 40 - 25(2)
Omit "Subdivision 40 - B", substitute "Division 40".
86 Paragraph 40 - 25(2)(d)
After "former Act", insert "or that you would have used if you had used the software for the purpose of producing assessable income before 1 July 2001".
87 At the end of subsection 40 - 30(1)
Add "or you could have deducted an amount under that Division for that expenditure if you had used the licence for the purpose of producing assessable income on or before that day".
88 Subsection 40 - 30(2)
Omit "Subdivision 40 - B", substitute "Division 40".
89 Paragraph 40 - 45(1)(b)
After "former Act", insert "or you could have deducted an amount under that Division for that expenditure if you had used the asset for the purpose of producing assessable income on or before that day".
90 Subsection 40 - 45(2)
Omit "Subdivision 40 - B", substitute "Division 40".
91 Subsection 40 - 50(2)
Omit "Subdivision 40 - B", substitute "Division 40".
92 At the end of Subdivision 40 - B
Add:
40 - 100 Commissioner's determination of effective life
A determination by the Commissioner of the effective life of an asset that was made under section 42 - 110 of the former Act and that was in force at the end of 30 June 2001 has effect as if it had been made under section 40 - 100 of the new Act.
93 Paragraph 40 - 340(1)(b)
After "subsection 40 - 10(3)", insert "or 40 - 12(3)".
94 Paragraph 40 - 340(2)(d)
After "subsection 40 - 10(3)", insert "or 40 - 12(3)".
95 Subsection 40 - 340(3)
After "subsection 40 - 10(3)", insert "or 40 - 12(3)".
96 Section 40 - 425
Repeal the section.
New Business Tax System (Capital Allowances--Transitional and Consequential) Act 2001
97 Subitem 488(1) of Schedule 2
Omit " subitem ( 2)", substitute "this item".
98 After subitem 488(1) of Schedule 2
Insert:
(1A) The amendment made by item 194 applies to amounts received on or after 1 July 2001.
(1B) The amendments made by items 255 to 258 (inclusive) and 260 to 314 (inclusive) apply to CGT events happening on or after 1 July 2001.
(1C) The amendment made by item 259 applies to balancing adjustment events occurring on or after 1 July 2001.
99 Subitem 488(3) of Schedule 2
Repeal the subitem, substitute:
(3) Despite its repeal by item 336 of this Schedule, Division 388 of the former Act continues to apply until the end of the 2002 - 03 income year.
100 Application of amendments
(1) The amendments made by items 1 to 39 (inclusive), 50 to 58 (inclusive) and 76 of this Schedule apply to:
(a) depreciating assets:
(i) you start to hold under a contract entered into after 30 June 2001; or
(ii) you constructed where the construction started after that day; or
(iii) you start to hold in some other way after that day; and
(b) expenditure that does not form part of the cost of a depreciating asset incurred after that day.
(2) The amendments made by items 40 to 49 (inclusive) of this Schedule apply to expenditure that does not form part of the cost of a depreciating asset incurred on or after 1 July 2001.
(3) The amendments made by items 59 and 60 of this Schedule apply to balancing adjustment events occurring on or after 1 July 2001.
(4) The amendments made by items 61 and 64 to 71 (inclusive) of this Schedule apply to CGT events happening on or after 1 July 2001.
(5) The amendment made by item 62 of this Schedule applies to assessments for the income year in which 29 January 2001 occurs and later income years.
(6) The amendment made by item 63 of this Schedule applies to assessments for the income year in which 1 July 2001 occurs and later income years.
(7) The amendment made by item 64 of this Schedule applies to debts that are terminated after 27 February 1998.
(8) The amendments made by items 72, 73, 74, 75, 77 and 78 of this Schedule apply to assessments for the first income year starting after 30 June 2001, and for later income years.