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  

Subdivision 40-B - Core provisions  

Operative provisions

SECTION 40-103   Effective life and remaining effective life of certain vessels  

40-103(1)  
If, at a particular time, item 10 of the table in subsection 40-102(4):


(a) starts to apply to a vessel (whether or not that item has previously applied to the vessel); or


(b) ceases to apply to a vessel (whether or not that item subsequently applies to the vessel);

at that time the effective life of the vessel changes accordingly.

40-103(2)  
If subsection (1) applies and the decline in value of the vessel is worked out using the * prime cost method, the remaining effective life of the vessel just after that time is:


Unadjusted remaining effective life × Alternative effective life
Unadjusted effective life

where:

alternative effective life
is:


(a) if that item starts to apply to the vessel at that time - what would have been the * effective life of the vessel just before that time if that item had applied to the vessel; or


(b) if that item ceases to apply to the vessel at that time - what would have been the effective life of the vessel just before that time if that item had not applied to the vessel.

unadjusted effective life
is what was the * effective life of the vessel just before that time.

unadjusted remaining effective life
is what was the * remaining effective life of the vessel just before that time.

Example:

Assume that item 10 of the table in subsection 40-102(4) ceases to apply to a vessel after having applied to the vessel for 7 years, and again starts to apply after another 4 years. Assume further that the effective life of a vessel of that kind has been determined under section 40-100 to be 20 years.

The remaining effective life of the vessel just before that item ceases to apply to the vessel is 3 years. Its alternative effective life is 20 years, and its unadjusted effective life is 10 years. Its remaining effective life just after that time is therefore 6 years.

The remaining effective life of the vessel just before that item again starts to apply to the vessel is 2 years. Its alternative effective life is 10 years, and its unadjusted effective life is 20 years. Its remaining effective life just after that time is therefore 1 year.


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