Document ID: chunk:federal_register_of_legislation:C2004C01257:clause:2_1:p17
Version: federal_register_of_legislation:C2004C01257
Segment Type: clause
Provision Reference: sch 2 cl 1 (pt 17/20)
Character Range: 49822–52496

debtor makes a payment, after the termination of the original debt arrangement, in respect of the replacement debt (other than to the extent to which it is a payment of interest, of *notional interest or in the nature of interest).

 (2) This is how to work out the amount of the deduction:

Working out the amount of the deduction

Step 1. Work out the amount that would be worked out under subsection 243‑35(2) if the replacement debt were terminated immediately before the payment.

Step 2. Work out the amount that would have been worked out under subsection 243‑35(4) at that time if the payment had been made in respect of the original debt and it had been taken into account.

Step 3. The amount of the deduction is the amount (if any) by which the amount worked out under Step 2 exceeds the amount worked out under Step 1.

 (3) The amount can be deducted for the income year in which the payment is made.

Division not to apply to termination of replacement debt

 (4) This Division does not apply to termination of the replacement debt referred to in paragraph (1)(b).

Limit on deductions

 (5) The total amounts deducted under section 243‑45 in respect of the original debt, or under this section in respect of the replacement debt, cannot exceed the sum of:
 (a) any amounts included in the debtor's assessable income under this Division in respect of the original debt; and
 (b) any amount by which deductions in respect of the original debt were reduced under section 243‑55.

243‑55  Effect of Division on later capital allowance deductions

 (1) This section applies where this Division (other than section 243‑65) has applied in relation to a debt and the debtor is entitled to a *capital allowance deduction (other than development allowance or drought investment allowance) in respect of the expenditure or the *financed property in relation to a time or period after the termination of the debt.

 (2) The *capital allowance deduction is reduced if the amount that would have been worked out under subsection 243‑35(2) would have exceeded the amount worked out under subsection 243‑35(4) if the following assumptions were applied in both subsections:

Assumptions to be applied

(1) That the debt was terminated at the time, or at the end of the period, referred to in subsection (1) of this section.

(2) That the amount unpaid at the time, or at the end of the period, is reduced by any amounts paid under a replacement debt.

(3) The debtor's *capital allowance deductions in respect of the expenditure or the *financed property were increased by the amount of the capital allowance deduction referred to in subsection (1) of this section.