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Tax Laws Amendment (Stronger, Fairer, Simpler and Other Measures) Bill 2011

Schedule 3 Small business entities’ deductions for motor vehicles

   

Income Tax Assessment Act 1997

1  After subsection 328-190(2)

Insert:

          (2A)  Subsection (2) does not apply to a * depreciating asset that is a * motor vehicle if section 328-237 applies to the asset for the income year.

2  Section 328-200 (method statement, step 2, paragraph (c))

After “328-190(2)”, insert “, and subsection 328-237(2) (if relevant),”.

3  After section 328-235

Insert:

Special rules for certain motor vehicles

328-237   Special deduction for certain motor vehicles

             (1)  This section applies to a * depreciating asset that is a * motor vehicle if:

                     (a)  in an income year (the start year ) you start to use the asset, or have it * installed ready for use, for a * taxable purpose; and

                     (b)  you were a * small business entity for the start year and the income year in which you started to * hold the asset; and

                     (c)  you chose to use this Subdivision for each of those years; and

                     (d)  subsection 328-180(1) does not provide for your deduction for the depreciating asset for the start year.

Deduction for the start year

             (2)  You deduct for the * depreciating asset for the start year the amount worked out under whichever of subsections (3) and (4) applies.

             (3)  The amount of your deduction is the * taxable purpose proportion of the * adjustable value of the * depreciating asset at the end of the start year if that proportion of that value is $5,000 or less.

             (4)  If that proportion of that value is more than $5,000, the amount of your deduction is the sum of:

                     (a)  $5,000; and

                     (b)  15% of the amount worked out using the formula:

Special deduction denied if low pool value

             (5)  Subsection (2) does not apply if section 328-210 sets your deduction for a * general small business pool for the start year.

Special rules about roll-overs

4  Subsection 328-250(1)

Omit “or subsection 328-190(2) (assets that will be pooled)”, substitute “, subsection 328-190(2) (assets that will be pooled) or subsection 328-237(2) (certain motor vehicles)”.

5  Subsection 328-250(2)

Omit “or subsection 328-190(2)”, substitute “, 328-190(2) or 328-237(2)”.

6  Paragraph 328-250(3)(b)

Omit “or 328-190(2)”, substitute “, 328-190(2) or 328-237(2)”.

7  Application of amendments

The amendments made by this Schedule apply in relation to entities and depreciating assets the entities started to hold (as defined in section 40-40 of the Income Tax Assessment Act 1997 ) in the 2012-13 income year and later income years.