INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 3 - Deductions  

Subdivision A - General  

SECTION 54A   EFFECTIVE LIFE OF PROPERTY  

54A(1)   Definition of effective life.  

For the purposes of section 55 , the effective life of a unit of property owned by a taxpayer is whichever of the following periods is applicable:

(a) if:

(i) there is in force a determination by the Commissioner under subsection (2) which specifies a period that the taxpayer may elect to adopt as the effective life of the property; and

(ii) the taxpayer elects to adopt that period;

that period;

(b) if paragraph (a) does not apply - the period, worked out as at the time when the property is first used for assessable income-producing purposes by the taxpayer, during which it would be reasonable to conclude that the property would be held by the taxpayer assuming:

(i) if the property was not new at that time - that the property was new at that time; and

(ii) that the taxpayer was to hold the property until it was no longer reasonably capable of being used, by the taxpayer or by any other person, for:

(A) assessable income-producing purposes; or

(B) exempt income-producing purposes; and

(iii) if, at the time the property was first used for assessable income-producing purposes by the taxpayer, it may reasonably be expected that the property will be subject to wear and tear by the taxpayer at a particular rate - that that rate were the rate of wear and tear to which the property will be subject; and

(iv) that the property were to be maintained in reasonably good order and condition;

(c) if:

(i) paragraph (a) does not apply; and

(ii) the property was new at the time when the property was first used by the taxpayer for assessable income-producing purposes; and

(iii) at the time of that first use, it would be reasonable to conclude that the property is likely to be:

(A) scrapped; or

(B) sold for scrap; or

(C) abandoned;

by the taxpayer at a later time; and

(iv) the period beginning at the time of that first use and ending at that later time is shorter than the period mentioned in paragraph (b);

that shorter period;

(d) if:

(i) paragraph (a) does not apply; and

(ii) the property was not new at the time when the property was first used by the taxpayer for assessable income-producing purposes; and

(iii) assuming that the property was new at the time of that first use, it would be reasonable to conclude at that time that the property would be likely to be:

(A) scrapped; or

(B) sold for scrap; or

(C) abandoned;

by the taxpayer at a later time; and

(iv) the period beginning at the time of that first use and ending at that later time is shorter than the period mentioned in paragraph (b);

that shorter period.

54A(2)   Commissioner may determine etc. periods which taxpayers may elect to adopt as the effective lives of units of property.  

The Commissioner may, by writing:

(a) make a determination specifying periods that taxpayers may elect to adopt as the effective lives of units of property owned by them; and

(b) revoke or vary such a determination.

54A(3)   Period may be specified unconditionally.  

A period may be specified unconditionally.

54A(4)   Specification of period may be conditional.  

A period, or 2 or more different periods, may be specified in relation to property of a particular kind subject to one or more specified conditions being satisfied as at the time when the property is first used by the taxpayer for assessable income-producing purposes.

54A(5)   Conditions may relate to use.  

The conditions may include, but are not limited to, conditions relating to:

(a) if the property is installed ready for use for the purpose of producing assessable income and held in reserve by the taxpayer - the particular use or uses for which the property has been installed and held in reserve; or

(b) in any other case - the particular use or uses of the property by the taxpayer.

54A(6)   Criteria for specifying periods.  

The matters to which the Commissioner may have regard in specifying periods include, but are not limited to, the periods that, apart from paragraph (1)(a), would be applicable under paragraph (1)(b) to property owned by particular groups of taxpayers who use similar property in a similar manner.

54A(7)   Taxpayer may require the Commissioner to vary a determination so that it specifies a period in relation to property.  

If, at the time when the property was first used by the taxpayer for assessable income-producing purposes:

(a) a determination is in force under subsection (2); and

(b) the determination does not specify a period that the taxpayer may elect to adopt as the effective life of the property;

the taxpayer may lodge with the Commissioner a written notice requiring the Commissioner to vary the determination in accordance with paragraph (2)(b) so that the determination specifies such a period.

54A(8)   Time within which Commissioner must vary determination.  

The Commissioner must comply with the requirement to vary a determination by whichever is the latest of the following times:

(a) the end of the period of 60 days (in this subsection called the `` original 60-day period '') after the notice requiring the Commissioner to vary the determination is lodged;

(b) if the Commissioner, by written notice served on the taxpayer within the original 60-day period, requests the taxpayer to give information relating to the variation sought by the taxpayer - the end of 60 days after the Commissioner receives that information;

(c) if the Commissioner, by written notice served under section 264 within the original 60-day period, requires a person other than the taxpayer to give information relating to the variation sought by the taxpayer - the end of 60 days after the Commissioner receives that information.

54A(9)   Determination etc. to be available for sale to public.  

A determination, or a variation or revocation of a determination, must be made available for sale to the public.

54A(10)   When determination etc. may be retrospective.  

A determination, or a variation or revocation of a determination, may be expressed to apply in relation to property first used by taxpayers for assessable income-producing purposes before the determination, variation or revocation, as the case may be, was made if, and only if:

(a) in the case of a determination or a variation of a determination - the specified period is the first period applicable to property of that kind; or

(b) in any case - the retrospectivity works to the advantage of taxpayers in calculating the effective lives of property of that kind.

54A(11)   Election to adopt period specified in determination as effective life.  

An election under paragraph (1)(a) is irrevocable and must be made:

(a) within 6 months after the later of the following:

(i) the end of the year of income in which the property is first used by the taxpayer for assessable income-producing purposes;

(ii) the commencement of this section; or

(b) within such further period as the Commissioner allows.

54A(12)   Commissioner to make first determination within 28 days.  

The Commissioner must make a determination under subsection (2) within 28 days after the commencement of this section.

54A(13)   Meaning of ``use for assessable income-producing purposes''.  

For the purposes of this section, a unit of property is taken to be used for assessable income-producing purposes by a taxpayer if, and only if, the property is:

(a) used by the taxpayer for the purpose of producing assessable income; or

(b) installed ready for use for that purpose and held in reserve by the taxpayer.

54A(14)   Meaning of ``use for exempt income-producing purposes''.  

For the purposes of this section, a unit of property is taken to be used for exempt income-producing purposes by a person if, and only if, the property is:

(a) used by the person for the purpose of producing exempt income; or

(b) installed ready for use for that purpose and held in reserve by the person.