Section FM 15 — Income Tax Act 2007: Amortising property and revenue account property

FM 15 Amortising property and revenue account property When this section applies (1) This section applies— (a) when property is transferred from a company ( company A ) to another company ( company B ) and both companies are in the same consolidated group at the time the transfer takes place, and the property transferred is— (i) amortising property; or (ii) revenue account property, but not trading stock or a financial arrangement to which the financial arrangements rules apply; and (b) to determine the income and deductions on a later disposal of property, or in relation to the depreciation or amortisation of the acquisition cost of the property under this Act. Acquisition by company B (2) Company B is treated as acquiring the property on the date it was acquired by company A for the amount set out in subsections (3) to (5). Whole pool (3) When the property forms the whole of a pool of property that is depreciated by company A under sections EE 20 to EE 24 (which relate to depreciation loss calculated under the pool method), the amount in subsection (2) is the adjusted tax value of the pool immediately before the property is transferred to company B. Part pool (4) When the property forms only part of a pool of property that is depreciated by company A under sections EE 20 to EE 24 , the amount in subsection (2) is the lesser of— (a) the market value of the property transferred to company B; and (b) the adjusted tax value of the whole of the pool immediately before the property is transferred to company B. Not pool property (5) If subsections (3) and (4) do not apply, the amount in subsection (2) is the sum of the following amounts of expenditure incurred by company A before the property is transferred to company B for which no deduction has been allowed other than by the depreciation or amortisation of the acquisition cost of the property under section EE 1 , EZ 7 , or EZ 8 (which relate to depreciation), or another amortisation provision of this Act: (a) the original purchase price of the property: (b) expenditure incurred— (i) in purchasing or improving the property; or (ii) in securing or improving company A’s legal rights to the property. When subsection (7) applies (6) Subsection (7) applies— (a) for the purposes of sections EE 46 to EE 52 (which relate to disposals and depreciation recovery income); and (b) to property referred to in subsection (1)(b) other than pooled property; and (c) in relation to an amount of depreciation loss or amortisation of acquisition cost up to the time the property is transferred from company A to company B. Pre-transfer deductions for depreciation loss and amortisation (7) Company B is treated as allowed the pre-transfer deductions that company A is allowed for amounts of depreciation loss under section EZ 7 or EZ 8 , or for an amount of expenditure or loss under another amortisation provision of this Act. Defined in this Act: acquire , adjusted tax value , amortising property , amount , company , consolidated group , deduction , depreciation loss , financial arrangement , financial arrangements rules , income , market value , other amortisation provision , pool , revenue account property , , trading stock Compare: 2004 No 35 s FD 10(1), (2)