Document ID: chunk:federal_register_of_legislation:C2005C00282:clause:2_73bc
Version: federal_register_of_legislation:C2005C00282
Segment Type: clause
Provision Reference: sch 2 cl 73BC
Character Range: 53539–56156

73BC  Meaning of notional Division 40 deduction

 (1) An eligible company has a notional Division 40 deduction for a section 73BA depreciating asset for a year of income if it would be entitled to a deduction under section 40‑25 of the Income Tax Assessment Act 1997 for the asset for the year of income assuming the changes set out in this section were made.

First change: replacement of references to use or installation ready for use for purpose of producing assessable income or for taxable purpose

 (2) The first change is that references in Division 40 of the Income Tax Assessment Act 1997 (other than for the purposes of sections 40‑100, 40‑105 and 40‑110) to using the asset, or having it installed ready for use:
 (a) for the purpose of producing assessable income; or
 (b) for a taxable purpose;
are instead references to using the asset for the purpose of the carrying on by or on behalf of the eligible company of research and development activities.

Note: Section 73BG modifies sections 40‑100, 40‑105 and 40‑110 (about effective life) so that a reference to the research and development purpose is added to the existing references, rather than replacing them.

Second change: method for working out decline in value where previous Division 40 deduction

 (3) The second change is that, if the eligible company was actually entitled to a deduction under Division 40 of the Income Tax Assessment Act 1997 for the section 73BA depreciating asset for any period before the start of the first period for which the company will be entitled to a deduction for the asset under this subsection, the same method for working out the decline in value as the company was using for the asset for the earlier period is used.

Third change: treatment of expenditure to which section 73BD or 73BE applies

 (4) The third change is that, in working out the cost of the section 73BA depreciating asset, any amount of expenditure (section 73BA depreciating asset expenditure) that would otherwise form part of that cost is to be ignored or treated in some other way if section 73BD or 73BE so provides for the purposes of this section.

Fourth change: certain provisions to be ignored

 (5) The fourth change is that Division 40 of the Income Tax Assessment Act 1997 applies as if section 73BA of this Act, and section 40‑425 and Subdivision 328‑D of that Act, had not been enacted.

 (6) In this section:

eligible company has the same meaning as in section 73B.

research and development activities has the same meaning as in section 73B.

section 73BA depreciating asset has the meaning given by section 73BB.