This section outlines the indefeasible right to use (IRU) and submarine cable systems provisions contained in a New Business Tax System (Capital Allowances) Act 1999.
Under this legislation, depreciation deductions for the cost of an indefeasible right to use the capacity in an international telecommunications submarine cable system are allowable over the effective life of the submarine cable.
The granting of an IRU is treated as a disposal by the granter of an ownership interest and the grantee can deduct the cost as a depreciation allowance. As the IRU is treated as plant, the holder has the choice of using either the prime cost or diminishing value methods. The deduction commences when you first exercise the right to use the allocated capacity of the cable for income-producing purposes.