Document ID: chunk:federal_register_of_legislation:C2024C00267:section:3:p19
Version: federal_register_of_legislation:C2024C00267
Segment Type: section
Provision Reference: s 3 (pt 19/31)
Character Range: 654698–657332

affects not only the adjustable value of the depreciating asset but also the joining entity's terminating value for the asset (which section 705‑30 of that Act defines as being equal to the asset's adjustable value just before the joining time).
 (4) The amount of the increase is so much of the adjustable value of the notional asset just before the joining time as reasonably relates to the depreciating asset.

Cost of asset
 (5) Division 705 of the Income Tax Assessment Act 1997 has effect as if the cost of a depreciating asset were increased by expenditure incurred that did not form part of the asset's cost worked out under Division 40 of that Act but would have if it had been incurred just before the joining time under a contract entered into after 30 June 2001.

Earlier deductions for decline in value of asset
 (6) Division 705 of the Income Tax Assessment Act 1997 has effect as if deductions relating to expenditure described in subsection (5) were deductions for the decline in value of the depreciating asset.
Example: Such deductions include:
(a) deductions under former Subdivision 330‑A, 330‑C or 330‑H of the Income Tax Assessment Act 1997, or a corresponding previous law, for the expenditure; and
(b) deductions under Division 40 of that Act for the decline in value of a notional asset that section 40‑35, 40‑37, 40‑40 or 40‑43 of this Act treated an entity as holding because of the expenditure.

Effective life of asset
 (7) If a depreciating asset's tax cost setting amount does not exceed the joining entity's terminating value for the asset, Division 40 of the Income Tax Assessment Act 1997 has effect as if the effective life of the asset were such period as is reasonable, having regard to the following:
 (a) the remainder of the effective life of the asset, worked out just before the joining time;
 (b) the remainder of the effective life, worked out just before the joining time, of each notional asset (which section 40‑35, 40‑37, 40‑40 or 40‑43 of this Act treats an entity as holding wholly or partly because of expenditure relating to the depreciating asset);
 (c) any other relevant matters.
Subsection 701‑55(2) of that Act has effect subject to this subsection.
Note 1: The effective life of the depreciating asset was set on 1 July 2001 by subsection 40‑75(4) of this Act, but may have been reset since under Subdivision 40‑B of the Income Tax Assessment Act 1997.
Note 2: The effective life of a notional asset is specified by whichever one of sections 40‑35, 40‑37, 40‑40 and 40‑43 of this Act is relevant to the notional asset.

Choosing to reduce tax cost setting amount of asset
 (8)