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INCOME TAX ASSESSMENT ACT 1997 - SECT 40.425 Allocating assets to a low - value pool

INCOME TAX ASSESSMENT ACT 1997 - SECT 40.425

Allocating assets to a low - value pool

  (1)   You may choose to allocate a * low cost asset you * hold to a low - value pool for the income year in which you start to use it, or have it * installed ready for use, for a * taxable purpose.

  (2)   A low - cost asset is a * depreciating asset (except a * horticultural plant) whose * cost as at the end of the income year in which you start to use it, or have it * installed ready for use, for a * taxable purpose is less than $1,000.

  (3)   You may also choose to allocate a * low - value asset to a low - value pool.

  (4)   You cannot allocate a * depreciating asset to a low - value pool if:

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

  (b)   you use the asset predominantly for the * purpose of producing assessable income that is not income from carrying on a * business; and

  (c)   the asset is not part of a set of assets that you started to hold in that income year where the total cost of the set of assets exceeds $300; and

  (d)   the total cost of the asset and any other identical, or substantially identical, asset that you start to hold in that income year does not exceed $300.

  (5)   A low - value asset is a * depreciating asset, except a * horticultural plant, you * hold:

  (a)   if you have deducted or can deduct amounts for it under this Division for a previous income year--for which you used the * diminishing value method; and

  (b)   that has an * opening adjustable value for the current year of less than $1,000 (worked out using the diminishing value method); and

  (c)   that is not a * low - cost asset.

  (6)   A * depreciating asset:

  (a)   to which Division   58 (about assets previously owned by an exempt entity) applied for an entity sale situation; and

  (b)   for which you used the * diminishing value method; and

  (c)   whose * adjustable value as at the end of the income year before the * current year is less than $1,000;

is also a low - value asset .

Exception: small business entities

  (7)   You cannot allocate a * depreciating asset to a low - value pool if you deduct amounts for it under Subdivision   328 - D (about capital allowances for small business entities).

Exception: medium sized businesses

  (7A)   You cannot allocate a * depreciating asset to a low - value pool if the decline in value of the asset for any income year is determined by section   40 - 82 (about assets costing below a threshold).

Exception: R&D

  (8)   You cannot allocate a * depreciating asset to a low - value pool if you are entitled under section   355 - 100 to a * tax offset for a deduction under section   355 - 305 for the asset for an income year starting before, or at the same time as, the allocation has effect.

Note:   A similar rule applies if you deducted or could have deducted amounts under former 73BA of the Income Tax Assessment Act 1936 (see section   40 - 430 of the Income Tax (Transitional Provisions) Act 1997 ).

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