Document ID: chunk:federal_register_of_legislation:C2025C00029:section:4:p23
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 4 (pt 23/37)
Character Range: 449692–452205

pool for:
 (a) if the credit year is later than the first income year for which *depreciating assets were allocated to the pool—the income year before the credit year; or
 (b) if the credit year is the first income year for which *depreciating assets were allocated to the pool—the credit year;
is reduced by an amount equal to the input tax credit.

Software development pools and project pools
 (4) For a software development pool or a project pool, the expenditure in the pool for the credit year, or the *pool value for the credit year, is reduced by an amount equal to the *input tax credit.

Small business pools
 (5) For a pool under Division 328, the *opening pool balance of the pool for the credit year is reduced by an amount equal to the input tax credit.

No reduction if market value
 (5A) However, there is no reduction to the *cost of a *depreciating asset if its cost is modified under Division 40 to be its *market value.

Second element of cost
 (6) There is a reduction under subsection (7) if:
 (a) the entity incurs expenditure in an income year (also the credit year) that is included in the second element of the *cost of a *depreciating asset allocated to a low‑value pool or a pool under Division 328 for or in the credit year; and
 (b) the entity is or becomes entitled, after the credit year, to an *input tax credit for the expenditure.
 (7) An amount equal to the amount of the *input tax credit is applied in reduction of:
 (a) for a low‑value pool:
 (i) if the credit year is later than the first income year for which *depreciating assets were allocated to the pool—the *closing pool balance of the pool for the income year before the credit year; or
 (ii) if the credit year is the first income year for which *depreciating assets were allocated to the pool—the *closing pool balance of the pool for the credit year; or
 (b) for a pool under Division 328—the *opening pool balance of the pool for the credit year.
 (7A) There is a reduction to an amount of expenditure included in the second element of the *cost of a *depreciating asset if:
 (a) the asset is allocated to a low‑value pool or a pool under Division 328 for or in the income year in which the expenditure was incurred; and
 (b) the entity that incurred the expenditure is or becomes entitled to an *input tax credit for the expenditure; and
 (c) the entitlement arises in the income year in which the expenditure was incurred.
The reduction is the amount of the input tax credit.

Increasing adjustments
 (8) There