Private ruling: Application of Subdivision 328-D
Published: July 2013
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Can you amend the relevant partnership income tax return to utilise the provisions of Subdivision 328-D of the Income Tax Assessment Act 1997 (ITAA 1997), where the provisions of Division 40 of the ITAA 1997 were applied in the original income tax return? | A1: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 328-D | Income Tax Assessment Act 1997 Division 40 | Income Tax Assessment Act 1997 Subdivision 40-F | Income Tax Assessment Act 1997 Subdivision 40-G | Income Tax Assessment Act 1997 Subsection 328-175(3)

Reasons for decision: Summary: The general provisions for claiming deductions for depreciating assets are set out in Division 40 of the ITAA 1997. When applying Division 40 you have to make certain choices of methods and rates and a taxpayer cannot revoke these decisions once they have been made. This choice must be made by the day on which the taxpayer's income tax return for the income year to which the choice relates is lodged, or within the extended time allowed by the Commissioner. This rule prevents taxpayers from swapping between methods and rates when it may be advantageous to do so in a later year (section 40-130 of the ITAA 1997). These choices are made within the application of Division 40. It would not prevent you from amending the relevant year to use the alternate depreciation method under Subdivision 328-D of the ITAA 1997 for that year. A small business entity as defined in Subdivision 328-C of the ITAA 1997, can choose to deduct amounts under the provisions of Subdivision 328-D instead of under Division 40 of the ITAA 1997. Once this choice has been made in an income year those items will remain in the small business pools, even if you are not a small business entity, or decide not to choose this subdivision for the later year. If you voluntarily opt out of the small business depreciation method, you cannot use it for a period of five years. For taxpayers carrying on a primary production business using depreciating assets that may be deductible under Subdivisions 40-F or 40-G a choice has to be made on whether to deduct the amounts under these subdivisions or under Subdivision 328-D (subsections 328-175(3) and (4) of ITAA 1997). Once you have made this choice for an asset, you cannot change it. You will be able to amend your relevant partnership income tax return to reflect a change in the depreciation method for depreciable assets except for assets where Subdivisions 40-F and 40-G of the ITAA 1997 have already been applied in a year.

Relevant facts: Your relevant Income Tax Return was lodged utilising the Capital Allowance provisions contained in Division 40 of the ITAA 1997. | You are a small business entity, because the turnover of you, your connected entities and affiliates is less than $2 million per annum. | You have not previously used the small business depreciation method in Subdivision 328-D of the ITAA 1997. | You wish to amend your relevant Income Tax Return utilising Subdivision 328-D of the ITAA 1997 to apply those capital allowance provisions rather than Division 40 provisions, except for items claimed under Subdivisions 40F and 40G of the ITAA 1997.