Document ID: chunk:federal_register_of_legislation:C2004C01190:clause:2_259
Version: federal_register_of_legislation:C2004C01190
Segment Type: clause
Provision Reference: sch 2 cl 259
Character Range: 177198–179520

259  At the end of Division 104
Add:

104‑235  Balancing adjustment events for depreciating assets: CGT event K7

 (1) CGT event K7 happens if:
 (a) a *balancing adjustment event occurs for a *depreciating asset you *held; and
 (b) at some time when you held the asset, you used it, or had it *installed ready for use, for a purpose other than a *taxable purpose.

 (2) The time of *CGT event K7 is when the *balancing adjustment event occurs.

 (3) Any *capital gain or *capital loss is worked out:
 (a) under section 104‑240; or
 (b) under section 104‑245 if the *depreciating asset was allocated to a low‑value pool.

 (4) A *capital gain or *capital loss you make is disregarded if:
 (a) the *depreciating asset is a *pre‑CGT asset; or
 (b) you can deduct an amount for the asset's decline in value under Division 328 (about STS taxpayers) for the income year in which the *balancing adjustment event occurred.

104‑240  Working out capital gain or loss for CGT event K7: general case

 (1) You make a capital gain if the *depreciating asset's *termination value is more than its *cost. The amount of the *capital gain is:
where:

sum of reductions is the sum of the reductions in your deductions for the asset under section 40‑25.

total decline is the decline in value of the *depreciating asset since you started to *hold it.

Note: The CGT concepts of cost base and capital proceeds are not relevant for this event.

 (2) You make a capital loss if the *depreciating asset's *cost is more than its *termination value. The amount of the *capital loss is:
where:

sum of reductions and total decline have the same meanings as in subsection (1).

104‑245  Working out capital gain or loss for CGT event K7: pooled assets

 (1) You make a capital gain if the *depreciating asset's *termination value is more than its *cost. The amount of the *capital gain is:
where:

taxable use fraction is the taxable use percentage (expressed as a fraction) that you estimated for the asset when you allocated it to the pool.

Note: The CGT concepts of cost base and capital proceeds are not relevant for this event.

 (2) You make a capital loss if the *depreciating asset's *cost is more than its *termination value. The amount of the *capital loss is:
where:

taxable use fraction has the same meaning as in subsection (1).