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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 40-105  Self-assessing effective life  

 View history reference ITAA 36

40-105(1)  

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You work out the effective life of a *depreciating asset yourself in accordance with this section.

40-105(1A)  

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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.

40-105(1B)  

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Secondly, if relevant for the asset:


(a) have regard to the wear and tear you reasonably expect from your expected circumstances of use; and


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

40-105(2)  

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If, in working out that period, you decide that the asset would be likely to be:


(a) scrapped; or


(b) sold for no more than scrap value or abandoned;

before the end of that period, its effective life ends at the earlier time. However, when making your decision, 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.

40-105(3)  

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You work out the period mentioned in subsection (1A) or (2) beginning at the *start time of the *depreciating asset.

Exception: intangibles

40-105(4)  

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This section does not apply to the following intangible *depreciating assets:


(a) assets to which an item in the table in subsection 40-95(7) applies;


(b) *mining, quarrying or prospecting rights;


(c) *mining, quarrying or prospecting information.
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