Document ID: chunk:federal_register_of_legislation:C2004C00927:clause:5_1:p2
Version: federal_register_of_legislation:C2004C00927
Segment Type: clause
Provision Reference: sch 5 cl 1 (pt 2/5)
Character Range: 549837–552346

income year you hold the item as trading stock as defined in section 70‑10 of the Income Tax Assessment Act 1997 (the 1997 Act);
section 70-30 of the 1997 Act applies as if you had started to hold the item as trading stock as defined in section 70‑10 of the 1997 Act immediately after the start of that income year.

70‑10  Accounting for your disposal of items that stop being trading stock because of the change of definition

 (1) This section explains how to account for your disposal of an item if:
 (a) immediately before 1 July 1997, the item was an item of your trading stock, as defined in subsection 6(1) of the Income Tax Assessment Act 1936 as in force at that time; and
 (b) the item has not been an item of your trading stock, as defined in section 70‑10 of the Income Tax Assessment Act 1997, after that time; and
 (c) the disposal occurs on or after 1 July 1997; and
 (d) subsection 36(1) of the Income Tax Assessment Act 1936 would have applied to the disposal if it had occurred before 1 July 1997.

Example: This section applies to your disposal on or after 1 July 1997 of an item you produced, manufactured, acquired or purchased before that day for manufacture, sale or exchange, but did not hold for that purpose immediately before that day or since the start of that day.

 (2) Sections 70‑90 and 70‑95 of the Income Tax Assessment Act 1997 (dealing with disposals of trading stock outside the ordinary course of business) apply to your disposal of the item as if it were an item of your trading stock (as defined in section 70‑10 of the Income Tax Assessment Act 1997).

Note: Applying those sections ensures that your assessable income includes the market value of the item on the day of disposal. This counters your deduction under the Income Tax Assessment Act 1936 for your expenditure to acquire the item as trading stock.

[The next section is section 70‑20.]

70‑20  Application of section 70-20 of the Income Tax Assessment Act 1997 to trading stock bought on or after 1 July 1997

  Section 70-20 (Non-arm's length transactions) of the Income Tax Assessment Act 1997 applies to purchases that take place on or after 1 July 1997.

[The next section is section 70‑40.]

70-40  Value of trading stock at the start of the 1997-98 income year

 (1) The value of an item of trading stock on hand at the start of the 1997-98 income year is its value as taken into account at the end of the 1996-97 income year under Subdivision B (Trading stock) of Division 2 of Part III of the