Commonwealth Consolidated Acts Commonwealth Consolidated ActsPart 1 -- Temporary full expensing of depreciating assets
Income Tax (Transitional Provisions) Act 1997
1 After Subdivision 40 - BA
Insert:
Subdivision 40 - BB -- Temporary full expensing of depreciating assets
Table of sections
40 - 140 Definitions
40 - 145 Interaction with other provisions
40 - 150 When an asset of yours qualifies for full expensing
40 - 155 Businesses with turnover under $5 billion
40 - 160 Full expensing of first and second element of cost for post - 2020 budget assets
40 - 165 Exclusions for post - 2020 budget assets applicable to businesses with turnover of $50 million or more
40 - 170 Full expensing of eligible second element of cost
40 - 175 When is an amount included in the eligible second element
40 - 180 Division 40 of the Income Tax Assessment Act 1997 applies to later years
In this Subdivision:
"2020 budget time" means 7.30 pm, by legal time in the Australian Capital Territory, on 6 October 2020.
40 - 145 Interaction with other provisions
If this Subdivision applies to work out the decline in value of a depreciating asset you hold for an income year, no other provision of this Act or the Income Tax Assessment Act 1997 applies to work out that decline in value.
40 - 150 When an asset of yours qualifies for full expensing
(1) For the purposes of this Subdivision, you are covered by this section for a depreciating asset if, on or before 30 June 2022:
(a) you start to hold the asset; and
(b) you start to use the asset, or have it installed ready for use, for a taxable purpose.
Exception--assets to which Division 40 does not apply
(2) Despite subsection (1), you are not covered by this section for the asset if Division 40 of the Income Tax Assessment Act 1997 does not apply to the asset because of section 4 0 - 45 of that Act.
Exception--assets not used or located in Australia
(3) Despite subsection (1), you are not covered by this section for the asset if, at the time you first use the asset, or have it installed ready for use, for a taxable purpose:
(a) it is not reasonable to conclude that you will use the asset principally in Australia for the principal purpose of carrying on a business; or
(b) it is reasonable to conclude that the asset will never be located in Australia.
Exception--assets for which the decline in value is worked out under Subdivision 40 - E or 40 - F of the Income Tax Assessment Act 1997
(4) Despite subsection (1), you are not covered by this section for the asset if:
(a) the asset is allocated to a low - value pool, or expenditure on the asset is allocated to a software development pool (see Subdivision 40 - E of the Income Tax Assessment Act 1997 ); or
(b) you or another taxpayer has deducted or can deduct amounts for the asset under Subdivision 40 - F of the Income Tax Assessment Act 1997 (about primary production depreciating assets).
40 - 155 Businesses with turnover under $5 billion
This section covers you for an income year if:
(a) you are a small business entity for the income year; or
(b) you would be a small business entity for the income year if:
(i) each reference in Subdivision 328 - C of the Income Tax Assessment Act 1997 (about what is a small business entity) to $10 million were instead a reference to $5 billion; and
(ii) the reference in paragraph 328 - 110(5)(b) of that Act to a small business entity were instead a reference to an entity covered by this section.
40 - 160 Full expensing of first and second element of cost for post - 2020 budget assets
(1) For the purposes of Division 40 of the Income Tax Assessment Act 1997 , the decline in value of a depreciating asset you hold for an income year (the current year ) is the amount worked out under subsection (3) if:
(a) you start to hold the asset at or after the 2020 budget time; and
(b) you start to use the asset, or have it installed ready for use, for a taxable purpose in the current year; and
(c) you are covered by section 4 0 - 150 for the asset; and
(d) you are covered by section 4 0 - 155 (about businesses with turnover under $5 billion) for the current year; and
(e) no balancing adjustment event happens to the asset in the current year.
Exclusions
(2) However, this section does not apply if an exclusion applies to you and the asset for the current year under section 4 0 - 165 (about exclusions for businesses with turnover of $50 million or more).
Amount of the decline in value
(3) The decline in value for the current year is:
(a) if the asset's start time occurs in the current year--the asset's cost as at the end of the current year, disregarding any amount included in the asset's cost after 30 June 2022; or
(b) if the asset's start time occurred in an earlier year--the sum of its opening adjustable value for the current year and any amount included in the second element of its cost for the current year, disregarding any amount included in the asset's cost after 30 June 2022.
Note 1: The asset's start time is when you first use it, or have it installed ready for use, for any purpose (including a non - taxable purpose): see subsection 4 0 - 60(2) of the Income Tax Assessment Act 1997 .
Note 2: A case covered by paragraph ( b) is where you start to hold the asset in the period 6 October 2020 to 30 June 2021 and use it for only non - taxable purposes in that period, then first use it for a taxable purpose in the period 1 July 2021 to 30 June 2022.
(1) For the purposes of subsection 4 0 - 160(2), an exclusion applies to you and an asset for an income year if:
(a) section 4 0 - 155 would not cover you for the income year if the reference in that section to $5 billion were instead a reference to $50 million; and
(b) any of the exclusions in this section applies in relation to the asset.
Exclusion--commitments already entered into
(2) This exclusion applies in relation to the asset if, before the 2020 budget time, you:
(a) entered into a contract under which you would hold the asset; or
(b) started to construct the asset; or
(c) started to hold the asset in some other way.
(3) This exclusion applies in relation to the asset (the post - 6 October 2020 asset ) if:
(a) on a day before 6 October 2020, you:
(i) enter into a contract under which you hold an asset on that day, or will hold the asset on a later day; or
(ii) start to construct an asset; or
(iii) start to hold an asset in some other way; and
(b) on a day on or after 6 October 2020 (the conduct day ), you engage in conduct that results in you:
(i) entering into a contract under which you hold the post - 6 October 2020 asset on the conduct day, or will hold that asset on an even later day; or
(ii) starting to construct the post - 6 October 2020 asset; or
(iii) starting to hold the post - 6 October 2020 asset in some other way; and
(c) the post - 6 October 2020 asset is the asset mentioned in paragraph ( a), or an identical or substantially similar asset; and
(d) you engage in that conduct for the purpose, or for purposes that include the purpose, of satisfying paragraph 4 0 - 160(1)(a) for the post - 6 October 2020 asset.
(4) For the purposes of subsections (2) and (3), treat yourself as having started to construct an asset at a time if you first incur expenditure in respect of the construction of the asset at that time.
(5) To avoid doubt, for the purposes of this section, you do not enter into a contract under which you hold an asset merely because you acquire an option to enter into such a contract.
(6) For the purposes of subsections (2), (3), (4) and (5), if a partner in a partnership does any of the following things, treat the partnership (instead of the partner) as having done the thing:
(a) entering into a contract under which the partnership would hold an asset;
(b) starting to construct an asset;
(c) acquiring an option to enter into such a contract.
Exclusion--second hand assets
(7) This exclusion applies in relation to the asset if:
(a) another entity held the asset when it was first used, or first installed ready for use, other than:
(i) as trading stock; or
(ii) merely for the purposes of reasonable testing or trialling; or
(b) you started holding the asset under section 4 0 - 115 of the Income Tax Assessment Act 1997 (about splitting a depreciating asset) or section 4 0 - 125 of that Act (about merging depreciating assets); or
(c) you already satisfied paragraph 4 0 - 160(1)(a) of this Act for the asset as a member of a consolidated group or a MEC group of which you are no longer a member.
(8) The exclusion in subsection (7) also applies in relation to an asset if:
(a) the asset is a licence (including a sub - licence) relating to an intangible asset; and
(b) the exclusion in that subsection applies in relation to the intangible asset.
(9) However, paragraph ( 7)(a) does not apply in relation to an intangible asset unless the asset was used for the purpose of producing ordinary income before you first used it, or had it installed ready for use, for any purpose. In applying this subsection, disregard ordinary income that arises as a result of the disposal of the asset to you.
40 - 170 Full expensing of eligible second element of cost
(1) For the purposes of Division 40 of the Income Tax Assessment Act 1997 , the decline in value of a depreciating asset you hold for an income year (the current year ) is the amount worked out under this section if:
(a) either:
(i) you start to use the asset, or have it installed ready for use, for a taxable purpose in the current year; or
(ii) you started to use the asset, or have it installed ready for use, for a taxable purpose in an earlier income year; and
(b) you are covered by section 4 0 - 150 for the asset; and
(c) you are covered by section 4 0 - 155 (about businesses with turnover under $5 billion) for the current year; and
(d) the eligible second element worked out under section 4 0 - 175 for the asset for the year is greater than nil; and
(e) no balancing adjustment event happens to the asset in the current year.
Amount of the decline in value
(2) The decline in value of the asset for the current year is:
(a) if the asset's decline in value for the year would, apart from section 4 0 - 145, be worked out under section 4 0 - 82 of the Income Tax Assessment Act 1997 --the amount worked out under subsection (3); or
(b) if the asset's decline in value for the year would, apart from section 4 0 - 145, be worked out under Subdivision 40 - BA of this Act--the amount worked out under subsection (4); or
(c) otherwise--the amount worked out under subsection (5).
Assets affected by section 4 0 - 82 of the Income Tax Assessment Act 1997 (about assets costing less than $150,000, medium sized businesses)
(3) If this subsection applies, the amount for the current year is the sum of:
(a) the amount that would be the asset's decline in value for the year under section 4 0 - 82 of the Income Tax Assessment Act 1997 , assuming the reference in subparagraph 4 0 - 82(3A)(b)(ii) of that Act to 31 December 2020 were instead a reference to the 2020 budget time; and
(b) the eligible second element worked out under section 4 0 - 175 of this Act for the asset for the year.
Assets affected by Subdivision 40 - BA (backing business investment)
(4) If this subsection applies, the amount for the current year is the sum of:
(a) the amount that would be worked out under paragraph 4 0 - 130(2)(a) or (4)(a) (whichever is applicable) for the year, assuming the references in paragraphs 40 - 130(2)(a) and (4)(a) to 30 June 2021 were instead references to the 2020 budget time; and
(b) the eligible second element worked out under section 4 0 - 175 for the asset for the year; and
(c) the amount that would be worked out under paragraph 4 0 - 130(2)(b) or (4)(b) (whichever is applicable) for the year, assuming the references in paragraphs 40 - 130(2)(b) and (4)(b) to "the amount worked out under paragraph ( a)" were instead references to "the amounts worked out under paragraphs 40 - 170(4)(a) and (b)".
Other assets
(5) If this subsection applies, the amount for the current year is the sum of:
(a) the amount that would be the asset's decline in value for the year under Division 40 of the Income Tax Assessment Act 1997 , disregarding any amounts included in the eligible second element worked out under section 4 0 - 175 of this Act for the asset for the year; and
(b) the eligible second element worked out under section 4 0 - 175 for the asset for the year.
40 - 175 When is an amount included in the eligible second element
The amount worked out under this section (the eligible second element) for a depreciating asset for an income year is the sum of any amounts included in the second element of the asset's cost at a time that is in both of the following periods:
(a) the income year;
(b) the period beginning at the 2020 budget time and ending on 30 June 2022.
40 - 180 Division 40 of the Income Tax Assessment Act 1997 applies to later years
(1) For an income year later than a year in which the decline in value is worked out under this Subdivision, the decline in value is worked out under the other provisions of Division 40 of the Income Tax Assessment Act 1997 .
Adjustment required for prime cost method
(2) If you use the prime cost method for the asset, you must adjust the formula in subsection 4 0 - 75(1) of the Income Tax Assessment Act 1997 for the later year in the manner set out in subsection 4 0 - 75(3) of that Act. The later year is the change year referred to in that subsection.
Balancing adjustment provisions
(3) Subdivision 40 - D of the Income Tax Assessment Act 1997 has effect as if the decline in value worked out under this Subdivision had been worked out under Subdivision 40 - B of that Act.
2 Subsection 328 - 180(1)
Insert:
"2020 budget time" means 7.30 pm, by legal time in the Australian Capital Territory, on 6 October 2020.
3 Subsection 328 - 180(1) ( paragraph ( b) of the definition of increased access year )
Omit "31 December 2020", substitute " 30 June 2022".
4 After section 328 - 180
Insert:
328 - 181 Full expensing--2020 budget time to 30 June 2022
(1) In this section:
"2020 budget time" has the same meaning as in section 328 - 180.
Year asset first used etc. for a taxable purpose
(2) For the purposes of determining whether subsection 328 - 180(1) of the Income Tax Assessment Act 1997 allows you to deduct an amount in relation to a depreciating asset, disregard paragraph ( b) of that subsection (which sets a limit of $1,000 on the cost of the asset) if, in the period beginning at the 2020 budget time and ending on 30 June 2022, you:
(a) start to hold the asset; and
(b) start to use it, or have it installed ready for use, for a taxable purpose.
Years later than the year asset first used etc. for a taxable purpose
(3) For the purposes of determining whether subsection 328 - 180(2) of the Income Tax Assessment Act 1997 allows you to deduct an amount in relation to a depreciating asset, disregard paragraph ( a) of that subsection (which sets a limit of $1,000 on the amount) if the amount is included in the second element of the cost of the asset at any time in the period beginning at the 2020 budget time and ending on 30 June 2022.
(4) In applying paragraph 328 - 180(3)(a) of the Income Tax Assessment Act 1997 to an asset, disregard an amount included in the second element of the cost of the asset if the amount is deducted under subsection 328 - 180(2) of that Act, as modified by subsection (3) of this section.
Low value pool
(5) Section 328 - 210 of the Income Tax Assessment Act 1997 applies as if the words "less than $1,000 but" in subsection (1) were disregarded, in relation to a deduction for an income year that ends:
(a) at or after the 2020 budget time; and
(b) on or before 30 June 2022.
Part 2 -- Adjusting existing measures
Income Tax Assessment Act 1997
5 Sub paragraph 4 0 - 82(2A)(d)(ii)
Omit "31 December 2020", substitute " 30 June 2021".
6 Paragraph 40 - 82(4A)(a)
Omit "31 December 2020", substitute " 30 June 2021".
7 Sub section 4 0 - 82(5) (heading)
Omit " 31 December 2020 ", substitute " 30 June 2021 ".
8 Sub section 4 0 - 82(5)
Omit "31 December 2020", substitute " 30 June 2021".
Income Tax (Transitional Provisions) Act 1997
9 After subsection 4 0 - 125(7)
Insert:
(7A) The exception in subsection (7) also applies in relation to an asset if:
(a) the asset is a licence (including a sub - licence) relating to an intangible asset; and
(b) the exception in that subsection applies in relation to the intangible asset.
10 Application
The amendment of section 4 0 - 125 of the Income Tax (Transitional Provisions) Act 1997 made by this Part applies in relation to assets you start to hold on or after 7.30 pm, by legal time in the Australian Capital Territory, on 6 October 2020.
11 Subparagraphs 328 - 180(4A)(a)(ii), (4A)(d)(i), (4A)(d)(ii) and (5A)(b)(iii)
Omit "31 December 2020", substitute " 30 June 2021".
Part 3 -- Consequential amendments
Income Tax Assessment Act 1997
12 Sub section 4 0 - 65(1) (note 4)
Repeal the note, substitute:
Note 4: Subdivisions 40 - BA and 40 - BB of the Income Tax (Transitional Provisions) Act 1997 may affect the operation of this section.
13 Sub section 4 0 - 75(2) (note 3)
Repeal the note, substitute:
Note 3: Subdivision 40 - BA or 40 - BB of the Income Tax (Transitional Provisions) Act 1997 may also require you to adjust the formula: see subsections 40 - 135(3) and 40 - 180(2) of that Act.
14 Sub section 4 0 - 82(2A) (note)
Omit "Note", substitute "Note 1".
15 At the end of subsection 4 0 - 82(2A)
Add:
Note 2: This subsection does not apply if Subdivision 40 - BB of the Income Tax (Transitional Provisions) Act 1997 applies: see section 4 0 - 145 of that Act.
16 Sub section 4 0 - 82(3A) (note)
Omit "Note", substitute "Note 1".
17 At the end of subsection 4 0 - 82(3A)
Add:
Note 2: This subsection does not apply if Subdivision 40 - BB of the Income Tax (Transitional Provisions) Act 1997 applies: see section 4 0 - 145 of that Act.
18 Subsection 328 - 180(1) (note)
Repeal the note, substitute:
Note: This threshold may be affected by section 328 - 180 (about temporary increased access to accelerated depreciation) or 328 - 181 (about temporary full expensing) of the Income Tax (Transitional Provisions) Act 1997 .
19 Paragraph 328 - 180(2)(a) (note)
Repeal the note, substitute:
Note: This threshold may be affected by section 328 - 180 (about temporary increased access to accelerated depreciation) or 328 - 181 (about temporary full expensing) of the Income Tax (Transitional Provisions) Act 1997 .
20 Paragraph 328 - 180(3)(a) (note)
Repeal the note, substitute:
Note: This threshold may be affected by section 328 - 180 (about temporary increased access to accelerated depreciation) or 328 - 181 (about temporary full expensing) of the Income Tax (Transitional Provisions) Act 1997 .
21 Subsection 328 - 210(1) (note 2)
Repeal the note, substitute:
Note 2: This threshold may be affected by section 328 - 180 (about temporary increased access to accelerated depreciation) or 328 - 181 (about temporary full expensing) of the Income Tax (Transitional Provisions) Act 1997 .
22 Subsection 328 - 250(1) (note)
Repeal the note, substitute:
Note: This threshold may be affected by section 328 - 180 (about temporary increased access to accelerated depreciation) or 328 - 181 (about temporary full expensing) of the Income Tax (Transitional Provisions) Act 1997 .
23 Subsection 328 - 250(4) (note)
Repeal the note, substitute:
Note: This threshold may be affected by section 328 - 180 (about temporary increased access to accelerated depreciation) or 328 - 181 (about temporary full expensing) of the Income Tax (Transitional Provisions) Act 1997 .
24 Subsection 328 - 253(4) (note)
Repeal the note, substitute:
Note: This threshold may be affected by section 328 - 180 (about temporary increased access to accelerated depreciation) or 328 - 181 (about temporary full expensing) of the Income Tax (Transitional Provisions) Act 1997 .
25 Paragraph 705 - 45(2)(b)
Repeal the paragraph, substitute:
(b) any of the following has applied before the joining entity became a * subsidiary member for the purposes of working out the asset's decline in value under Division 40:
(i) section 4 0 - 82;
(ii) Subdivision 40 - BA of the Income Tax (Transitional Provisions) Act 1997 ;
(iii) Subdivision 40 - BB of that Act; and
Income Tax (Transitional Provisions) Act 1997
26 Sub section 4 0 - 120(1) (note)
Omit "Note", substitute "Note 1".
27 At the end of subsection 4 0 - 120(1)
Add:
Note 2: This subsection does not apply if Subdivision 40 - BB of this Act applies: see section 4 0 - 145 of this Act.