Definition of "revenue account property"
2010 amendment clarifies the definition of 'revenue account property' in both the 2004 and 2007 Income Tax Acts.
The Rewrite Advisory Panel considered the drafting of the definition of "revenue account property" in the Income Tax Acts 2004 and 2007 were ambiguous as they could be read as requiring a factual test to be applied.
The consequence of that interpretation was that property that became valueless, despite initially coming within the meaning of "revenue account property", would no longer be "revenue account property". The Panel was concerned that the cost of the property might then not be deductible as a result of the property’s loss in value.
The amendment clarified the definition of "revenue account property" in both the 2004 and 2007 Acts to ensure that that if "revenue account property" becomes valueless, it does not cease to be revenue account property.
This amendment ensures that the cost of revenue account property that becomes valueless may still be deductible under the general permission and allocated to the appropriate income year under section EA 1 (Trading stock) or section EA 2 (Other revenue account property).
The amendment applies from the beginning of the 2005-06 income year (both the 2004 and 2007 Acts have been amended to give effect to this application).