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INCOME TAX ASSESSMENT ACT 1997 - SECT 250.285

Treatment of asset after Division ceases to apply to the asset

  (1)   For the purposes of Division   40, if:

  (a)   this Division applies to you and an asset; and

  (b)   the * arrangement period for the * tax preferred use of the asset ends at a particular time; and

  (c)   the asset would have had an * adjustable value at that time, for the purposes of Division   40, if this Division had never applied to the asset;

the adjustable value of the asset, immediately after the end of the arrangement period, is taken to be equal to the amount worked out using the following method statement:

Method statement

Step 1.   Work out whether section   250 - 150 applies.

Step 2.   If section   250 - 150 does not apply, the amount is the * end value of the asset at the end of the arrangement period.

Step 3.   If section   250 - 150 does apply, the amount is worked out by:

  (a)   multiplying the * end value of the asset at the end of the * arrangement period by the * disallowed capital percentage; and

  (b)   then multiplying the adjustable value of the asset at the end of the arrangement period (worked out under section   40 - 85) by 100% minus the disallowed capital percentage); and

  (c)   then adding the amount obtained under paragraph   (a) and the amount obtained under paragraph   (b).

  (2)   If:

  (a)   this Division applies to you and an asset; and

  (b)   the * arrangement period for the * tax preferred use of the asset ends; and

  (c)   a net amount is included in your assessable income in relation to the * financial benefits that are * subject to the deemed loan treatment (taking into account the adjustments under Subdivision   250 - E in relation to the financial benefits that are subject to the deemed loan treatment);

the * cost base, and the * reduced cost base, of the asset are each taken to be reduced at the end of the arrangement period by an amount equal to the difference between:

  (d)   the total amounts or values of the financial benefits that were subject to deemed loan treatment; and

  (e)   the net amount referred to in paragraph   (c).

Note:   See subsection   (6) in relation to the application of paragraph   (d).

  (3)   If:

  (a)   this Division applies to you and an asset; and

  (b)   the * arrangement period for the * tax preferred use of the asset ends; and

  (c)   a net amount is allowed to you as a deduction in relation to the * financial benefits that are * subject to the deemed loan treatment (taking into account the adjustments under Subdivision   250 - E in relation to the financial benefits that are subject to the deemed loan treatment);

the * cost base, and the * reduced cost base, of the asset are each taken to be reduced at the end of the arrangement period by an amount equal to the sum of:

  (d)   the total amounts or values of the financial benefits that were subject to deemed loan treatment; and

  (e)   the net amount referred to in paragraph   (c).

Note:   See subsection   (6) in relation to the application of paragraph   (d).

  (4)   If:

  (a)   this Division applies to you and an asset; and

  (b)   the * arrangement period for the * tax preferred use of the asset ends; and

  (c)   a net amount is included in your assessable income in relation to the * financial benefits that are * subject to the deemed loan treatment (taking into account the adjustments under Subdivision   250 - E in relation to the financial benefits that are subject to the deemed loan treatment);

then, in determining the profit or loss on the sale of the asset, a deduction equal to the difference between the following is taken to have been allowed for expenditure by you in connection with the asset:

  (d)   the total amounts or values of the financial benefits that were subject to deemed loan treatment; and

  (e)   the net amount referred to in paragraph   (c).

Note:   See subsection   (6) in relation to the application of paragraph   (d).

  (5)   If:

  (a)   this Division applies to you and an asset; and

  (b)   the * arrangement period for the * tax preferred use of the asset ends; and

  (c)   a net amount is allowed to you as a deduction in relation to the * financial benefits that are * subject to the deemed loan treatment (taking into account the adjustments under Subdivision   250 - E in relation to the financial benefits that are subject to the deemed loan treatment);

then, in determining the profit or loss on the sale of the asset, a deduction equal to the sum of the following is taken to have been allowed for expenditure by you in connection with the asset:

  (d)   the total amounts or values of the financial benefits that were subject to deemed loan treatment; and

  (e)   the net amount referred to in paragraph   (c).

Note:   See subsection   (6) in relation to the application of paragraph   (d).

  (6)   In applying paragraphs   (2)(d), (3)(d), (4)(d) and (5)(d), disregard subsection   250 - 160(2) (reasonable estimate of end value treated as financial benefit subject to deemed loan treatment).


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