Document ID: chunk:federal_register_of_legislation:C2021C00270:clause:7_1:p4
Version: federal_register_of_legislation:C2021C00270
Segment Type: clause
Provision Reference: sch 7 cl 1 (pt 4/6)
Character Range: 109326–111879

the purposes of subsections (2) and (3), treat yourself as having started to construct an asset at a time if you first incur expenditure in respect of the construction of the asset at that time.
 (5) To avoid doubt, for the purposes of this section, you do not enter into a contract under which you hold an asset merely because you acquire an option to enter into such a contract.
 (6) For the purposes of subsections (2), (3), (4) and (5), if a partner in a partnership does any of the following things, treat the partnership (instead of the partner) as having done the thing:
 (a) entering into a contract under which the partnership would hold an asset;
 (b) starting to construct an asset;
 (c) acquiring an option to enter into such a contract.

Exclusion—second hand assets
 (7) This exclusion applies in relation to the asset if:
 (a) another entity held the asset when it was first used, or first installed ready for use, other than:
 (i) as trading stock; or
 (ii) merely for the purposes of reasonable testing or trialling; or
 (b) you started holding the asset under section 40‑115 of the Income Tax Assessment Act 1997 (about splitting a depreciating asset) or section 40‑125 of that Act (about merging depreciating assets); or
 (c) you already satisfied paragraph 40‑160(1)(a) of this Act for the asset as a member of a consolidated group or a MEC group of which you are no longer a member.
 (8) The exclusion in subsection (7) also applies in relation to an asset if:
 (a) the asset is a licence (including a sub‑licence) relating to an intangible asset; and
 (b) the exclusion in that subsection applies in relation to the intangible asset.
 (9) However, paragraph (7)(a) does not apply in relation to an intangible asset unless the asset was used for the purpose of producing ordinary income before you first used it, or had it installed ready for use, for any purpose. In applying this subsection, disregard ordinary income that arises as a result of the disposal of the asset to you.

40‑170  Full expensing of eligible second element of cost
 (1) For the purposes of Division 40 of the Income Tax Assessment Act 1997, the decline in value of a depreciating asset you hold for an income year (the current year) is the amount worked out under this section if:
 (a) either:
 (i) you start to use the asset, or have it installed ready for use, for a taxable purpose in the current year; or
 (ii) you started to use the asset, or have it installed ready for use, for a taxable purpose in an earlier income year; and
 (b) you are covered by