INCOME TAX ASSESSMENT ACT 1997 - SECT 40.103 Effective life and remaining effective life of certain vessels

INCOME TAX ASSESSMENT ACT 1997 - SECT 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.

  (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:

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.