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INCOME TAX ASSESSMENT ACT 1997 - SECT 250.285

Treatment of asset after Division ceases to apply to the asset

             (1)  For the purposes of Division 40, if:

                     (a)  this Division applies to you and an asset; and

                     (b)  the * arrangement period for the * tax preferred use of the asset ends at a particular time; and

                     (c)  the asset would have had an * adjustable value at that time, for the purposes of Division 40, if this Division had never applied to the asset;

the adjustable value of the asset, immediately after the end of the arrangement period, is taken to be equal to the amount worked out using the following method statement:

Method statement

Step 1.    Work out whether section 250-150 applies.

Step 2.    If section 250-150 does not apply, the amount is the * end value of the asset at the end of the arrangement period.

Step 3.    If section 250-150 does apply, the amount is worked out by:

               (a)     multiplying the * end value of the asset at the end of the * arrangement period by the * disallowed capital percentage; and

              (b)     then multiplying the adjustable value of the asset at the end of the arrangement period (worked out under section 40- 85) by 100% minus the disallowed capital percentage); and

               (c)     then adding the amount obtained under paragraph (a) and the amount obtained under paragraph (b).

             (2)  If:

                     (a)  this Division applies to you and an asset; and

                     (b)  the * arrangement period for the * tax preferred use of the asset ends; and

                     (c)  a net amount is included in your assessable income in relation to the * financial benefits that are * subject to the deemed loan treatment (taking into account the adjustments under Subdivision 250-E in relation to the financial benefits that are subject to the deemed loan treatment);

the * cost base, and the * reduced cost base, of the asset are each taken to be reduced at the end of the arrangement period by an amount equal to the difference between:

                     (d)  the total amounts or values of the financial benefits that were subject to deemed loan treatment; and

                     (e)  the net amount referred to in paragraph (c).

Note:          See subsection (6) in relation to the application of paragraph (d).

             (3)  If:

                     (a)  this Division applies to you and an asset; and

                     (b)  the * arrangement period for the * tax preferred use of the asset ends; and

                     (c)  a net amount is allowed to you as a deduction in relation to the * financial benefits that are * subject to the deemed loan treatment (taking into account the adjustments under Subdivision 250-E in relation to the financial benefits that are subject to the deemed loan treatment);

the * cost base, and the * reduced cost base, of the asset are each taken to be reduced at the end of the arrangement period by an amount equal to the sum of:

                     (d)  the total amounts or values of the financial benefits that were subject to deemed loan treatment; and

                     (e)  the net amount referred to in paragraph (c).

Note:          See subsection (6) in relation to the application of paragraph (d).

             (4)  If:

                     (a)  this Division applies to you and an asset; and

                     (b)  the * arrangement period for the * tax preferred use of the asset ends; and

                     (c)  a net amount is included in your assessable income in relation to the * financial benefits that are * subject to the deemed loan treatment (taking into account the adjustments under Subdivision 250-E in relation to the financial benefits that are subject to the deemed loan treatment);

then, in determining the profit or loss on the sale of the asset, a deduction equal to the difference between the following is taken to have been allowed for expenditure by you in connection with the asset:

                     (d)  the total amounts or values of the financial benefits that were subject to deemed loan treatment; and

                     (e)  the net amount referred to in paragraph (c).

Note:          See subsection (6) in relation to the application of paragraph (d).

             (5)  If:

                     (a)  this Division applies to you and an asset; and

                     (b)  the * arrangement period for the * tax preferred use of the asset ends; and

                     (c)  a net amount is allowed to you as a deduction in relation to the * financial benefits that are * subject to the deemed loan treatment (taking into account the adjustments under Subdivision 250-E in relation to the financial benefits that are subject to the deemed loan treatment);

then, in determining the profit or loss on the sale of the asset, a deduction equal to the sum of the following is taken to have been allowed for expenditure by you in connection with the asset:

                     (d)  the total amounts or values of the financial benefits that were subject to deemed loan treatment; and

                     (e)  the net amount referred to in paragraph (c).

Note:          See subsection (6) in relation to the application of paragraph (d).

             (6)  In applying paragraphs (2)(d), (3)(d), (4)(d) and (5)(d), disregard subsection 250-160(2) (reasonable estimate of end value treated as financial benefit subject to deemed loan treatment).



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