Income Tax Assessment Act 1997



Division 40 - Capital allowances  

Subdivision 40-B - Core provisions  

Operative provisions

SECTION 40-105   Self-assessing effective life  


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


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.


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.


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.


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


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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