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INCOME TAX ASSESSMENT ACT 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-10 - CAPITAL ALLOWANCES: RULES ABOUT DEDUCTIBILITY OF CAPITAL EXPENDITURE  

Division 40 - Capital allowances    View history reference

Subdivision 40-B - Core provisions    View history reference

Operative provisions

SECTION 40-100  Commissioner's determination of effective life  

 View history reference ITAA 36

40-100(1)  

The Commissioner may make a written determination specifying the effective life of *depreciating assets. The determination may specify conditions for particular depreciating assets.

40-100(2)  

A determination may specify a day from which it takes effect for *depreciating assets specified in the determination.

40-100(3)  

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A determination may operate retrospectively to a day specified in the determination if:


(a) there was no applicable determination at that day for the *depreciating asset covered by the determination; or


(b) the determination specifies a shorter *effective life for the depreciating asset covered by the determination than was previously applicable.

Criteria for making a determination

40-100(4)  

 View history reference
The Commissioner is to make a determination of the effective life of a *depreciating asset in accordance with subsections (5) and (6).

40-100(5)  

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Firstly, estimate the period (in years, including fractions of years) the asset can be used by any entity for one or more of the following purposes:


(a) a *taxable purpose;


(b) the purpose of producing *exempt income or *non-assessable non-exempt income;


(c) the purpose of conducting *R&D activities, assuming that this is reasonably likely.

40-100(6)  

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Secondly, if relevant for the asset:


(a) assume the asset will be subject to wear and tear at a rate that is reasonable for the Commissioner to assume; and


(b) assume the asset will be maintained in reasonably good order and condition; and


(c) have regard to the period within which the asset is likely to be scrapped, sold for no more than scrap value or abandoned.

However, for paragraph (c), disregard reasons attributable to the technical risk in conducting *R&D activities if it is reasonably likely that the asset will be used for such activities.


 



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