Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) If:
(a) an asset of the joining entity is a * depreciating asset to which Division 40 applies; and
(aa) just before the entity became a subsidiary member, subsection 40 - 10(3) or 40 - 12(3) of the Income Tax (Transitional Provisions) Act 1997 applied for the purposes of the joining entity working out the asset's decline in value under Division 40; and
Note: The effect of those subsections was to preserve an entitlement to accelerated depreciation.
(b) the asset's * tax cost setting amount would be greater than the joining entity's * terminating value for the asset; and
(c) the * head company chooses to apply this section to the asset;
the asset's tax cost setting amount is reduced so that it equals the terminating value.
Note 1: A consequence of the choice is that accelerated depreciation will apply to the asset: see section 701 - 80.
Note 2: Unlike the position with a reduction in tax cost setting amount under section 705 - 40, the amount of the reduction is not re - allocated among other assets.
(2) If:
(a) an asset of the joining entity is a * depreciating asset to which Division 40 applies; and
(b) any of the following has applied before the joining entity became a * subsidiary member for the purposes of working out the asset's decline in value under Division 40:
(i) section 40 - 82;
(ii) Subdivision 40 - BA of the Income Tax (Transitional Provisions) Act 1997 ;
(iii) Subdivision 40 - BB of that Act; and
(c) the asset's * tax cost setting amount would be greater than the joining entity's * terminating value for the asset;
the asset's tax cost setting amount is reduced so that it equals the terminating value.
Note 1: The provisions referred to in paragraph (b) provide for an accelerated decline in value of certain assets.
Note 2: Unlike the position with a reduction in tax cost setting amount under section 705 - 40, the amount of the reduction is not re - allocated among other assets.