Section HG 7 — Income Tax Act 2007: Disposal of depreciable property

HG 7 Disposal of depreciable property When this section applies (1) This section applies when a person (the exiting partner ) disposes of some or all of their partner’s interests in a partnership, to the extent to which those interests include an item of depreciable property that is not depreciable intangible property, and the total cost of the item when it was first acquired by the partners of the partnership is $200,000 or less. Exiting partner: excluded payment (2) The amount of consideration paid or payable to the exiting partner for the depreciable property is excluded income of the exiting partner. Exiting partner: no deduction (3) The exiting partner is denied any deduction in relation to the depreciable property for the income year in which the disposal of the depreciable property occurs and later income years, to the extent to which the entering partner is allowed a deduction because of subsection (5). Entering partner: no deduction (4) The entering partner is denied any deduction for the amount of consideration paid or payable to the exiting partner for the depreciable property. Entering partner: stepping in (5) For the purposes of calculating the income tax liability of an entering partner for the part of the income year after the disposal of the depreciable property occurs and later income years (the post-disposal periods ), the entering partner is treated for the post-disposal periods as if they had originally acquired and held the depreciable property, not the exiting partner. Exclusion by election (6) This section does not apply for the partners of a small partnership if section HG 3(2) applies. Relationship with section HG 4 (7) Section HG 4 overrides this section. Defined in this Act: deduction , depreciable intangible property , depreciable property , dispose , entering partner , excluded income , income tax liability , partner , partner’s interests , partnership , small partnership Section HG 7: inserted, on 1 April 2008, by section 19(1) of the Taxation (Limited Partnerships) Act 2008 (2008 No 2). Section HG 7(6): amended (with effect on 1 April 2008), on 6 October 2009, by section 273(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).