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INCOME TAX (TRANSITIONAL PROVISIONS) ACT 1997 - SECT 40.345

Balancing adjustments for depreciating assets that retain CGT indexation

             (1)  The amount included in your assessable income under subsection 40-285(1) or 104-240(1) of the new Act as a result of a balancing adjustment event occurring for:

                     (a)  plant that you acquired at or before 11.45 am, by legal time in the Australian Capital Territory, on 21 September 1999; or

                     (b)  a depreciating asset that is not plant and that you acquired before 1 July 2001;

is reduced (but not below nil) if:

                     (c)  for a paragraph (a) case--there would have been a reduction under subsection 42-192(2) of the former Act as a result of that event; or

                     (d)  for a paragraph (b) case--there would have been a reduction under subsection 42-192(2) of the former Act as a result of that event if the asset were plant.

             (2)  The amount of the reduction is the amount worked out under subsection 42-192(2) of the former Act.

             (3)  There is no reduction under subsection (1) to an amount included in your assessable income under subsection 104-240(1) if the balancing adjustment event results in a discount capital gain under Division 115.

             (4)  However, you can choose not to make a reduction under subsection (1) and instead take advantage of the discount capital gain.

             (5)  Subsection (6) applies to an entity (the transferee ) if there is roll-over relief under section 40-340 of the new Act as a result of a balancing adjustment event happening to a depreciating asset held by the transferee.

             (6)  Subsections (1), (2), (3) and (4) apply also to the transferee if:

                     (a)  for a depreciating asset that is plant:

                              (i)  the transferor referred to in section 40-340 of the new Act started to hold the plant under a contract entered into at or before 11.45 am, by legal time in the Australian Capital Territory, on 21 September 1999; or

                             (ii)  the transferor constructed it and the construction started at or before that time; or

                            (iii)  the transferor acquired it in some other way at or before that time; or

                            (iv)  the transferor acquired it from an entity that was working out the decline in value of the plant under subsection 40-10(3) or 40-12(3) of this Act and subparagraph (i), (ii) or (iii) of this paragraph applied to that entity or to the earliest successive transferor; or

                     (b)  for a depreciating asset that is not plant:

                              (i)  the transferor started to hold the asset under a contract entered into before 1 July 2001; or

                             (ii)  the transferor constructed it and the construction started at or before that day; or

                            (iii)  the transferor acquired it in some other way before that day.



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