Today I am announcing the release of the draft legislation and explanatory statement which gives effect to the Government announcements made on 4 August 1997, in Press Release No.84, and 14 January 1998, in Press Release No.2.
The Government announced that it had decided to legislate to limit the depreciation deduction that can be claimed by the purchasers of exempt entities, or of assets owned by exempt entities, to the higher of the depreciable asset's notional written down value (NWDV) and its pre-existing audited book value (PABV).
The draft legislation includes provisions for the on-sale of assets previously owned by exempt entities. The measures provide for an amount (similar to a balancing adjustment) in the assessable income of the first purchaser of the asset should the first purchaser on-sell the asset for more than its written down value. This will ensure that any increase in depreciation available to the subsequent purchaser is offset by an amount taxable to the first purchaser. This prevents on-sale being used to circumvent the measure and preserves its integrity. Subsequent transactions in respect of the asset will be accorded the same treatment as any other asset sales between or by taxpayers.
The draft legislation and explanatory statement are available for downloading in PDF format from the ATO web site at http://www.ato.gov.au
Comments in relation to the draft can be sent to:
First Assistant Commissioner
Legislative Services
Australian Taxation Office
PO Box 900
CIVIC SQUARE ACT 2608