Document ID: chunk:federal_register_of_legislation:C2024C00267:section:3:p1
Version: federal_register_of_legislation:C2024C00267
Segment Type: section
Provision Reference: s 3 (pt 1/9)
Character Range: 200065–202768

3                                                                    At that time, neither of these applies:
                                                                     (a) it could reasonably be expected that, because of the plant's use, whether in connection with another asset or not, the transferee would not be a small business taxpayer for the income year following the start year or for either of the next 2 income years;
                                                                     (b) the plant is being or is intended to be let predominantly on a lease of a kind specified in subsection (5).

 (4) For the purposes of item 2 in the table in subsection (3), an entity is treated as if it is not carrying on a business in relation to the activities of a partnership in which the entity is a partner unless the entity is connected with the partnership.
 (5) A lease of plant referred to in item 3 of the table in subsection (3) is an agreement (including a renewal of an agreement) under which the holder of the plant grants a right to use the plant to another entity, but not a hire purchase agreement or a short‑term hire agreement.
 (6) The transferee works out the decline in value of the plant by:
 (a) for the diminishing value method—replacing the component in the formula in subsection 40‑70(1) of the new Act that includes the plant's effective life with the rate the transferor, or the earliest successive transferor, was using; or
 (b) for the prime cost method:
 (i) replacing the component in the formula in subsection 40‑75(1) of the new Act that includes the plant's effective life with the rate the transferor, or the earliest successive transferor, was using; and
 (ii) increasing the plant's cost under Division 42 of the former Act by any amounts included in the second element of the plant's cost after 30 June 2001.

Meaning of small business taxpayer
 (7) An entity is a small business taxpayer for an income year if:
 (a) the entity carries on a business in that year; and
 (b) the entity's average turnover for that year is less than $1,000,000.
Note: An entity is treated as carrying on a business if it is winding up a business and it was previously a small business taxpayer: see subsection (11).

Meaning of average turnover
 (8) An entity's average turnover for an income year (the current year) is:

where:
number of averaging years is:
 (a) 3; or
 (b) if the entity did not carry on a business in each of the current year and the 2 years before the current year, the number of those income years in which the entity carried on a business.
Note: An entity is treated as carrying on a business if it is winding up a business and it was previously a