Income Tax (Transitional Provisions) Act 1997

For the purposes of Division 40 of the Income Tax Assessment Act 1997, the decline in value of a depreciating asset you hold for an income year (the current year) is the amount worked out under this section if:

either:

you start to use the asset, or have it installed ready for use, for a taxable purpose in the current year; or

you started to use the asset, or have it installed ready for use, for a taxable purpose in an earlier income year; and

you are covered by section 40‑150 for the asset; and

you are covered for the current year by any of the following:

section 40‑155 (about businesses with turnover under $5 billion);

section 40‑157 (about corporate tax entities with income under $5 billion); and

the eligible second element worked out under section 40‑175 for the asset for the year is greater than nil; and

no balancing adjustment event happens to the asset in the current year; and

you have not made a choice under section 40‑190 in relation to the current year.

However, this section does not apply if:

section 40‑157 covers you for the current year (but section 40‑155 does not); and

an exclusion applies to you and the asset for the current year under section 40‑167 (about exclusions for corporate tax entities with income under $5 billion).

The decline in value of the asset for the current year is:

if the asset’s decline in value for the year would, apart from section 40‑145, be worked out under section 40‑82 of the Income Tax Assessment Act 1997—the amount worked out under subsection (3); or

if the asset’s decline in value for the year would, apart from section 40‑145, be worked out under Subdivision 40‑BA of this Act—the amount worked out under subsection (4); or

otherwise—the amount worked out under subsection (5).

If this subsection applies, the amount for the current year is the sum of:

the amount that would be the asset’s decline in value for the year under section 40‑82 of the Income Tax Assessment Act 1997, assuming the reference in subparagraph 40‑82(3A)(b)(ii) of that Act to 31 December 2020 were instead a reference to the 2020 budget time; and

the eligible second element worked out under section 40‑175 of this Act for the asset for the year.

If this subsection applies, the amount for the current year is the sum of:

the amount that would be worked out under paragraph 40‑130(2)(a) or (4)(a) (whichever is applicable) for the year, assuming the references in paragraphs 40‑130(2)(a) and (4)(a) to 30 June 2021 were instead references to the 2020 budget time; and

the eligible second element worked out under section 40‑175 for the asset for the year; and

the amount that would be worked out under paragraph 40‑130(2)(b) or (4)(b) (whichever is applicable) for the year, assuming the references in paragraphs 40‑130(2)(b) and (4)(b) to “the amount worked out under paragraph (a)” were instead references to “the amounts worked out under paragraphs 40‑170(4)(a) and (b)”.

If this subsection applies, the amount for the current year is the sum of:

the amount that would be the asset’s decline in value for the year under Division 40 of the Income Tax Assessment Act 1997, disregarding any amounts included in the eligible second element worked out under section 40‑175 of this Act for the asset for the year; and

the eligible second element worked out under section 40‑175 for the asset for the year.