Income Tax Assessment Act 1997
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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