Issue
Are insurance proceeds received where a depreciating asset is lost or destroyed assessable under Subdivision 20-A of the Income Tax Assessment Act 1997 ('ITAA 1997')?
Decision
No. Insurance proceeds received where a depreciating asset is lost or destroyed fall within the meaning of termination value under item 8, subsection 40-300(1) of the ITAA 1997, and are, therefore, not included in the amount of recoupment assessed under Subdivision 20-A of the ITAA 1997.
Facts
The taxpayer's computer and printer were stolen in May 2002. The assets were insured and a claim was made with the insurance company.
The insurance company provided a replacement computer and printer.
The replacement assets were used wholly for a taxable purpose.
Reasons for Decision
Subdivision 20-A of the ITAA 1997 includes in assessable income an amount of assessable recoupment as defined in section 20-20 of the ITAA 1997.
However, subsection 20-25(5) of the ITAA 1997 specifically excludes an amount you receive as assessable recoupment under subsection 20-20(2) of the ITAA 1997 that is the termination value of the depreciating asset.
An amount received or receivable from the insurance company where a depreciating asset is lost or destroyed falls within the definition of termination value in item 8 in the table in subsection 40-300(2) of the ITAA 1997.