Section DB 65 — Income Tax Act 2007: Allowance for certain commercial buildings

DB 65 Allowance for certain commercial buildings When this section applies (1) This section applies when–– (a) a person owns an item that is a commercial building (the building ), and the building is depreciable property with an annual rate of 0%, in an income year; and (b) the item starting pool described in subsection (3)(a) is greater than the total of all deductions allowed under this section for income years before the income year; and (c) the person has been allowed a deduction for an amount of depreciation loss for the building for the 2010–11 income year and the person has not disposed of it since then; and (d) the person has never had a deduction for an amount of depreciation loss for a separate item of depreciable property that is commercial fit-out and that was acquired at the same time as the building and relates to the building; and (e) the building was acquired in the 2010–11 or earlier income years; and (f) the person is not allowed a deduction under any other provision in relation to the building, for the income year. Deduction (2) Except as provided by subsection (6), the person is treated as having a loss for the income year equal to the amount calculated using the formula— starting pool × 0.02 × whole months 12. Definition of items in formula (3) In the formula in subsection (2),–– (a) starting pool is the amount given by the formula in subsection (4): (b) whole months is the number of whole months in the income year in which the item is used, or is available for use, by the person in deriving assessable income or carrying on a business for the purpose of deriving assessable income. Starting pool: formula (4) For the purposes of subsection (3)(a), the amount is calculated using the formula— (0.15 × building atv) – fitout atv. Definition of items in formula (5) In the formula in subsection (4),–– (a) building atv is the adjusted tax value of the building that results for the 2010–11 income year after all relevant amounts for that income year have been subtracted under subpart EE (Depreciation): (b) fitout atv is the total adjusted tax value of all items of commercial fit-out that results for the 2010–11 income year after all relevant amounts for that income year have been subtracted under subpart EE , if–– (i) the items of commercial fit-out relate to the building and were acquired after the building was acquired; and (ii) the person has had a deduction for an amount of depreciation loss for the items of commercial fit-out. Exception: deductible amount (6) Despite subsection (2), if the item starting pool described in subsection (3)(a), reduced by the total of all deductions allowed under this section for income years before the income year, is equal to an amount (the deductible amount ) that is smaller than the amount given by the formula in subsection (2) (the formula amount ), then the person is treated as having a loss for the income year equal to the deductible amount instead of the formula amount. Treatment of amounts under specific and general rules for deductions (7) The capital limitation does not apply to a loss under this section merely because the item of property is itself of a capital nature. Defined in this Act: adjusted tax value , amount , assessable income , building , capital limitation , commercial building , commercial fit-out , deduction , depreciable property , depreciation loss , dispose , estimated useful life , income year Section DB 65: added, on 1 April 2011 (applying for the 2011–12 and later income years), by section 39(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).