Document ID: chunk:federal_register_of_legislation:C2004C00927:clause:1_2:p8
Version: federal_register_of_legislation:C2004C00927
Segment Type: clause
Provision Reference: sch 1 cl 2 (pt 8/11)
Character Range: 30820–33637

is included in assessable income, ie $10,000.

 Applying the method statement to the 1998-99 income year: a further $10,000 is included in the company's assessable income.

20-45  Effect of balancing charge

 (1) This section may affect the operation of section 20-35 or 20-40 (as appropriate) if:
 (a) a balancing adjustment is required for the *current year (or for an earlier income year) because you have deducted or can deduct an amount for an income year for the loss or outgoing; and
 (b) an amount (the balancing charge) is included in your assessable income for the *current year (or for the earlier income year) because of the balancing adjustment.

To find out about balancing adjustments, see section 40-25.

Effect on section 20-35

 (2) In applying section 20-35, treat each of the following as reduced by the balancing charge:
 (a) the amount of the loss or outgoing;
 (b) the total of what you can deduct for the loss or outgoing for the *current year, or have deducted or can deduct for an earlier income year.

Effect on section 20-40

 (3) In applying the method statement in subsection 20-40(3), reduce the total deductions for the loss or outgoing by the balancing charge.

Example: Continuing the example in subsection 20-40(3): during the 2000-2001 income year, the mining company:
  *    receives a further $10,000 as recoupment of the original expenditure; and
  *    sells its mining operations for $75,000.

 As a result of the sale, a balancing charge of $5,000 is included under section 330-485 in the company's assessable income for that income year.

 How much of the recoupment amount received in the 2000-2001 income year is assessable for that income year?

 Applying the method statement in subsection 20-40(3):

 After Step 1: the total assessable recoupment is $30,000 (received during 1997‑98 and 2000-2001).

 After Step 2: the recoupment already assessed is $20,000 (for 1997‑98 and 1998-99).

 After Step 3: the unassessed recoupment is:
total assessable recoupment – recoupment already assessed,
ie $30,000 – $20,000 = $10,000.

 After Step 4: the total deductions for the loss or outgoing are $30,000 ($10,000 for each of 1997-98, 1998-99 and 1999-2000), reduced by $5,000 (the amount included in assessable income for the balancing adjustment), ie $25,000.

 After Step 5: the outstanding deductions are:
total deductions for the loss or outgoing – recoupment already assessed, ie $25,000 – $20,000 = $5,000.

 After Step 6: the unassessed recoupment (Step 3) is greater than outstanding deductions (Step 5), so the amount of the outstanding deductions is included in assessable income, ie $5,000.

20-50  If the expense is only partially deductible

 (1) This section extends the operation of section 20-35 or 20-40 (as appropriate) to a case where the total of what