Commentary on Sections Glossary Structure of Part 2 Section 185: Fixture on which a plant and machinery allowance has been claimed
667.This section is based on section 56B of CAA 1990. It restricts the amount of expenditure that may be taken into account if a previous “owner” has claimed a plant and machinery allowance in respect of the fixture.
668.The broad effect of this section is to restrict the amount of future claims to the lowest disposal value brought into account by previous owners. This provision ensures that taxpayers cannot artificially inflate the amount attributed to a fixture on which plant and machinery allowances may be available at the expense of land on which plant and machinery allowances are not available. The limit is known as the “maximum allowable amount”.
669.Subsection (2)(b) ensures that if excessive expenditure has already been taken into account, then an adjustment should be made.
670.Subsection (3) provides that the “maximum allowable amount” may be increased to the extent that any of the new qualifying expenditure falls within section 25.
671.Subsection (4) ensures that if more than one disposal event has occurred, then the section only considers the most recent event. Subsection (5) makes it clear that a person’s qualifying expenditure may be restricted by reference to a disposal value brought into account by the same person in respect of a previous period of ownership.
672.If there is a sale of the plant or machinery as a chattel between unconnected persons, then subsections (6) and (7) provide that taxpayers may ignore ownership and disposal values in respect of any time before such a sale.