ATO ID 2002/782: Theft of a depreciating asset - involuntary disposal
Date of decision: 17 June 2002
Year of income: Year ended 30 June 2002
Business line: Public Groups and International

Issue
Is the theft of a computer and printer an involuntary disposal under section 40-365 of the Income Tax Assessment Act 1997 ('ITAA 1997')?

Decision
Yes. The theft of a computer and printer is an involuntary disposal under section 40-365 of the ITAA 1997.

Facts
The taxpayer's computer and printer were stolen in May 2002. The assets were insured and a claim was made with the insurance company. The insurance company provided a replacement computer and printer. The replacement assets were used wholly for a taxable purpose.

Reasons for decision
Summary: Section 40-365 of the ITAA 1997 allows a taxpayer to exclude some or all of a balancing adjustment amount from their assessable income where a depreciating asset is lost or destroyed. A taxpayer can make this choice to the extent that the amount is applied in reduction of the cost or opening adjustable value of one or more replacement assets. It is considered that the theft of a depreciating asset falls within the meaning of the words lost or destroyed because the taxpayer is deprived of the use of the asset and no longer possesses the asset. The taxpayer may therefore exclude some or all of the amount that would otherwise be included in assessable income to the extent that the amount is applied in reduction of the cost of one or more replacement assets.

Legislative references: Income Tax Assessment Act 1997 section 40-365 subsection 40-365(3) subsection 40-365(4)
Related ATO interpretative decisions: ATO ID 2002/783
Subject references: Disposal of depreciating asset Involuntary disposal Theft of asset