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INCOME TAX ASSESSMENT ACT 1997 - SECT 328.175

Calculations for depreciating assets

             (1)  You can choose to calculate your deductions and some amounts of assessable income under this Subdivision instead of under Division 40 for an income year for all the * depreciating assets that you * hold if:

                     (a)  you are a * small business entity for the income year; and

                     (b)  you started to use the assets or have them * installed ready for use, for a * taxable purpose during or before that income year.

This subsection has effect subject to subsections (2) to (10).

Note:          If you choose to use this Subdivision for an income year, you continue to use this Subdivision for your general small business pool for a later income year even if you are not a small business entity, or do not choose to use this Subdivision, for the later year: see section 328- 220.

Exception: assets to which Division 40 does not apply

             (2)  This Subdivision does not apply to a * depreciating asset to which Division 40 does not apply because of section 40- 45.

Exception: primary production

             (3)  If you are a * small business entity for the income year, for each * depreciating asset you use to carry on a * primary production business and for which you could deduct amounts under Subdivision 40-F (about primary production depreciating assets) or Subdivision 40-G (about capital expenditure of primary producers and other landholders) apart from subsection (1), you can choose:

                     (a)  to deduct amounts for it under Subdivision 40-F or 40-G; or

                     (b)  to calculate your deductions for it under this Subdivision.

Note:          A choice made by a transferor under this subsection for an asset applies also to the transferee if roll-over relief under subsection 40-340(1) or (3) is chosen: see section 328- 245.

             (4)  You must make the choice under subsection (3) for each * depreciating asset of the kind referred to in that subsection for the later of:

                     (a)  the first income year for which you are, or last were, a * small business entity; or

                     (b)  the income year in which you started to use the asset, or have it * installed ready for use, for a * taxable purpose.

Once you have made the choice for an asset, you cannot change it.

Exception: horticultural plants

             (5)  You cannot deduct amounts for * horticultural plants (including grapevines) under this Subdivision.

Exception: asset let on depreciating asset lease

             (6)  You cannot deduct amounts for a * depreciating asset under this Subdivision if the asset is being or might reasonably be expected to be let predominantly on a * depreciating asset lease.

Exception: assets in a low-value or software development pool

             (7)  You cannot deduct amounts for a * depreciating asset under this Subdivision if:

                     (a)  the asset was allocated to your low-value pool under Subdivision 40-E, or to your pool under the former Subdivision 42-L, during an income year for which you were not a * small business entity or had not chosen to use this Subdivision; or

                     (b)  the asset is * in-house software and expenditure on the asset is allocated to a software development pool under that Subdivision.

Note:          You will have to continue deducting amounts for these assets under Division 40.

             (8)  A * depreciating asset referred to in subsection (7) is not allocated to your * general small business pool under this Subdivision and does not qualify for a deduction under section 328-180.

Exception: assets for which previously entitled to a tax offset under the R&D provisions

             (9)  You cannot deduct amounts for a * depreciating asset for any period under this Subdivision if you are entitled under section 355-100 to a * tax offset for a deduction under section 355- 305 for the asset for the same or an earlier period.

Exception: second-hand assets used in residential property

          (9A)  You cannot deduct amounts for a * depreciating asset under this Subdivision to the extent that section 40-27 prevents you from deducting amounts under subsection 40-25(1) for the asset.

Exception: restriction on choosing to use this Subdivision

           (10)  If:

                     (a)  you choose to use this Subdivision to deduct amounts for your * depreciating assets for an income year; and

                     (b)  you do not choose to use this Subdivision for a later income year for which you satisfy the conditions to make this choice (see subsection (1));

you cannot choose to use this Subdivision until at least 5 years after the first later income year for which you satisfied the conditions to make this choice but did not do so.

Note 1:       Your ability to choose to use this Subdivision may also be restricted by section 328-440 of the Income Tax (Transitional Provisions) Act 1997 .

Note 2:       If you choose to use this Subdivision for an income year, you continue to use it for assets that have been allocated to your general small business pool for a later income year even if you are not a small business entity, or do not choose to use this Subdivision, for the later year: see section 328- 220.

Note 3:       Subsections 328-180(2) and (3) of the Income Tax (Transitional Provisions) Act 1997 affect the operation of this subsection in relation to income years ending on or after 12 May 2015.



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