Taxation Laws Amendment Act (No. 4) 2002 (53 of 2002)

Schedule 4   Effective life of depreciating assets

Part 1   Amendments

Income Tax Assessment Act 1997

2   After subsection 40-95(4)

Insert:

(4A) Subsection (4) does not apply to a *depreciating asset if subsection (4B) or (4C) applies to the asset.

(4B) For a *depreciating asset that you start to *hold if:

(a) the former holder is an *associate of yours; and

(b) the associate has deducted or can deduct an amount for the asset under this Division; and

(c) section 40-102 applied to the asset immediately before you started to hold it because an item in the tables in subsections 40-102(4) and (5) applied to it at the relevant time (the relevant time for the associate ) that applied to the associate under subsection 40-102(3); and

(d) a different item in the tables in subsections 40-102(4) and (5) applies to the asset when you start to hold it; and

(e) the item referred to in paragraph (d) would have applied to the asset at the relevant time for the associate if the use to which the asset were put at that time were the use (the new use ) to which it is put when you start to hold it;

you must use:

(f) if the associate was using the *diminishing value method for the asset - an *effective life equal to the *capped life that would have applied to the asset under subsection 40-102(4) or (5) at the relevant time for the associate if the use to which the asset were put at that time were the new use; or

(g) if the associate was using the *prime cost method - an effective life equal to the capped life that:

(i) would have applied to the asset under subsection 40-102(4) or (5) at the relevant time for the associate if the use to which the asset were put at that time were the new use; and

(ii) is yet to elapse at the time you start to hold it.

Note 1: If paragraph (e) is not satisfied, subsection (4C) may apply to the depreciating asset.

Note 2: You can require the associate to tell you the relevant time that applied to the associate under subsection 40-102(3): see section 40-140.

(4C) For a *depreciating asset that you start to *hold if:

(a) the former holder is an *associate of yours; and

(b) the associate has deducted or can deduct an amount for the asset under this Division; and

(c) section 40-102 applied to the asset immediately before you started to hold it; and

(d) one of the following applies:

(i) no item in the tables in subsections 40-102(4) and (5) applies to the asset when you start to hold it;

(ii) subsection (4B) would apply to the asset but for paragraph (e) of that subsection not being satisfied;

you must use:

(e) if the associate was using the *diminishing value method for the asset - the *effective life determined by the Commissioner for the asset under section 40-100 that the associate would have used if section 40-102 had not applied to the asset; or

(f) if the associate was using the *prime cost method - an effective life equal to any period of the effective life determined by the Commissioner for the asset under section 40-100 that:

(i) the associate would have used if section 40-102 had not applied to the asset; and

(ii) is yet to elapse at the time you start to hold it.

Note: You can require the associate to tell you which effective life the associate would have used if section 40-102 had not applied to the asset: see section 40-140.