INCOME TAX ASSESSMENT ACT 1997 - SECT 705.45 Reduction in tax cost setting amount for accelerated depreciation assets

INCOME TAX ASSESSMENT ACT 1997 - SECT 705.45

  (1)   If:

  (a)   an asset of the joining entity is a * depreciating asset to which Division   40 applies; and

  (aa)   just before the entity became a subsidiary member, subsection   40 - 10(3) or 40 - 12(3) of the Income Tax (Transitional Provisions) Act 1997 applied for the purposes of the joining entity working out the asset's decline in value under Division   40; and

Note:   The effect of those subsections was to preserve an entitlement to accelerated depreciation.

  (b)   the asset's * tax cost setting amount would be greater than the joining entity's * terminating value for the asset; and

  (c)   the * head company chooses to apply this section to the asset;

the asset's tax cost setting amount is reduced so that it equals the terminating value.

Note 1:   A consequence of the choice is that accelerated depreciation will apply to the asset: see section   701 - 80.

Note 2:   Unlike the position with a reduction in tax cost setting amount under section   705 - 40, the amount of the reduction is not re - allocated among other assets.

  (2)   If:

  (a)   an asset of the joining entity is a * depreciating asset to which Division   40 applies; and

  (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   40 - 82;

  (ii)   Subdivision   40 - BA of the Income Tax (Transitional Provisions) Act 1997 ;

  (iii)   Subdivision   40 - BB of that Act; and

  (c)   the asset's * tax cost setting amount would be greater than the joining entity's * terminating value for the asset;

the asset's tax cost setting amount is reduced so that it equals the terminating value.

Note 1:   The provisions referred to in paragraph   (b) provide for an accelerated decline in value of certain assets.

Note 2:   Unlike the position with a reduction in tax cost setting amount under section   705 - 40, the amount of the reduction is not re - allocated among other assets.