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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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