Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 45.10

  (1)   An amount is included in your assessable income if:

  (a)   a partnership of which you are (or were) a member has deducted or can deduct an amount for the decline in value of * plant; and

  (b)   the deductions have been or would be reflected in your interest in the partnership net income or partnership loss; and

  (c)   for most of the time when the partnership * held the plant, it leased it to another entity; and

  (d)   all or part of the lease period occurred on or after 22   February 1999; and

  (e)   on or after that day, you dispose of your interest in the plant, or part of it, and that disposal constitutes a * balancing adjustment event; and

  (f)   the sum of the following amounts is more than that part of the plant's * written down value that is attributable to that interest:

  (i)   the money you receive or are entitled to receive for the disposal;

  (ii)   the amount of any reduction in a liability of yours as a result of the disposal;

  (iii)   the * market value of any other benefit you receive or are entitled to receive as a result of the disposal.

  (2)   The amount included is the excess referred to in paragraph   (1)(f). It is included for the income year in which the disposal occurred.

Example:   Chris has a 50% share in a partnership formed to lease an asset. The asset has a written down value of $124,000 (of which Chris' share is $62,000).

  Chris assigns his partnership share to another entity for $34,000 plus the other entity agreeing to take over Chris' obligations to service his share of the partnership debt (which is $165,000). The total consideration is:

  The amount assessable under section   45 - 10 is the excess referred to in paragraph   45 - 10(1)(f), which is:

  This amount would be reduced if part of it is included in Chris' assessable income under another provision (see subsection   45 - 10(5)).

Note 1:   There is a reduction of the amount included for certain plant acquired before 21   September 1999: see section   45 - 30.

Note 2:   There is a limit on the amount included for plant for which there is a CGT exemption: see section   45 - 35.

  (3)   An amount is also included in your assessable income if:

  (a)   a partnership of which you are (or were) a member has deducted or can deduct an amount for the decline in value of * plant; and

  (b)   the deductions have been or would be reflected in your interest in the partnership net income or partnership loss; and

  (c)   for most of the time when the partnership * held the plant, it leased it to another entity; and

  (d)   all or part of the lease period occurred on or after 22   February 1999; and

  (e)   on or after that day, you dispose of:

  (i)   your interest in the plant, or part of it; or

  (ii)   a right under, or an interest in, the lease;

    and that disposal does not constitute a * balancing adjustment event.

  (4)   The amount included is the sum of the following amounts:

  (a)   the money you receive or are entitled to receive for the disposal;

  (b)   the amount of any reduction in a liability of yours as a result of the disposal;

  (c)   the * market value of any other benefit you receive or are entitled to receive as a result of the disposal.

It is included for the income year in which the disposal occurred.

  (5)   However, an amount is not included in your assessable income under this section to the extent that:

  (a)   it is included in that assessable income under a provision of this Act outside this Division; or

  (b)   you apply it under section   40 - 365 (about offsetting balancing adjustments).

Note:   There are special rules for disposals between 22   February 1999 and 21   September 1999: see Division   45 of the Income Tax (Transitional Provisions) Act 1997 .