Regarding insurance receipt payouts, was there a section in the 14th edition text book I could find to determine if certain payout types are assessable income?
As on the ATO website (https://www.ato.gov.au/Individuals/Dealing-with-disasters/Damaged-or-destroyed-property/Insurance-payouts/) it says Trading Stock would be assessable, but depreciating assets are not too clear.
Would applying a rollover relief under s 40-365 of the ITAA 1997 for assets that are involuntarily disposed of (by destruction of theft) make an insurance receipt for depreciable asset not taxable then?
Thanks for the email and query.
Insurance receipts from trading stock (animals or trees) would be treated as assessable income and there is no depreciation for livestock, but we do revalue the livestock value.
On the other hand, if you receive an insurance payout for the destruction of a depreciating asset (generally its Fixed Asset) used to produce income, such as a car or office equipment, you will need to calculate a balancing adjustment.
I understand if the insurance payout is:
- <span style=”text-decoration: underline;”>more</span> than the adjustable value, the excess is included in your assessable income
- <span style=”text-decoration: underline;”>less</span> than the adjustable value, you can claim a deduction for the difference.
But I am have trouble working out the adjusted value if you are only told the asset is in the SBE general depreciation pool when it was destroyed and no amounts are given regarding its Opening Written Down Value. So I am finding it hard to compare a payout against an unknown adjustable value.