Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p2
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 2/3)
Character Range: 911122–913875

of producing *exempt income or *non‑assessable non‑exempt income;
 (c) the purpose of conducting *R&D activities, assuming that this is reasonably likely.
 (6) Secondly, if relevant for the asset:
 (a) assume the asset will be subject to wear and tear at a rate that is reasonable for the Commissioner to assume; and
 (b) assume the asset will be maintained in reasonably good order and condition; and
 (c) have regard to the period within which the asset is likely to be scrapped, sold for no more than scrap value or abandoned.
However, for paragraph (c), 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.

40‑102  Capped life of certain depreciating assets
 (1) If this section applies to a *depreciating asset, the effective life of the asset is the period (the capped life) that applies to the asset under subsection (4) or (5) at the relevant time (which is worked out using subsection (3)).

Working out if this section applies
 (2) This section applies to a *depreciating asset if:
 (a) you choose, under paragraph 40‑95(1)(a), to use an *effective life determined by the Commissioner for the asset under section 40‑100; and
 (b) your choice is limited to a determination in force at the time mentioned in paragraph 40‑95(2)(a) or (c); and
 (c) a *capped life applies to the asset under subsection (4) or (5) at the relevant time (which is worked out using subsection (3)); and
 (d) the capped life is shorter than the effective life mentioned in paragraph (a).
 (3) For the purposes of this section, the relevant time is:
 (a) the *start time of the *depreciating asset if:
 (i) paragraph 40‑95(2)(c) applies to you; or
 (ii) paragraph 40‑95(2)(a) applies to you and a *capped life does not apply to the asset under subsection (4) or (5) at the time mentioned in that paragraph; or
 (iii) paragraph 40‑95(2)(a) applies to you and the capped life that applies to the asset under subsection (4) or (5) at the time mentioned in that paragraph is longer than the capped life that applies to the asset at its start time; or
 (b) if paragraph (a) does not apply—the time mentioned in paragraph 40‑95(2)(a).

Capped life
 (4) If the *depreciating asset corresponds exactly to the description in column 2 of the table, the capped life of the asset is the period specified in column 3 of the table.

Capped life of certain depreciating assets
Item                                        Kind of depreciating asset                                                                                                                                                                                                                                 Period