Document ID: chunk:federal_register_of_legislation:C2025C00029:section:8:p3
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 8 (pt 3/7)
Character Range: 925393–928146

cost method; or
 (iii) are using an effective life because of subsection 40‑95(4), (4B), (4C), (5), (5B) or (5C); and
 (b) its *cost is increased in that year by at least 10%.
Note 1: You may conclude that the effective life is the same.
Note 2: For the elements of the cost of a depreciating asset, see Subdivision 40‑C.
Example 1: Paul purchases a photocopier and self‑assesses its effective life at 6 years. In a later year he incurs expenditure to increase the quality of the reproductions it makes. He recalculates its effective life, but concludes that it remains the same.
Example 2: Fiona also purchases a photocopier and self‑assesses its effective life at 6 years. In a later year she incurs expenditure to incorporate a more robust paper handling system. She recalculates its effective life, and concludes that it is increased to 7 years.
 (3) You must recalculate a *depreciating asset's *effective life for the income year in which you started to *hold it if:
 (a) you are using an effective life because of subsection 40‑95(4), (4B), (4C), (5), (5B) or (5C); and
 (b) the asset's *cost is increased after you started to hold it in that year by at least 10%.
 (3A) Subsections (1), (2) and (3) do not apply to a *depreciating asset that is a *mining, quarrying or prospecting right or *mining, quarrying or prospecting information.
 (3B) You may choose to recalculate the *effective life of a *mining, quarrying or prospecting right, or *mining, quarrying or prospecting information, from a later income year if the effective life you have been using is no longer accurate:
 (a) because of changed circumstances relating to an existing or proposed mine, petroleum field or quarry to which that right or information relates; or
 (b) because that right or information now relates to an existing or proposed mine, petroleum field or quarry; or
 (c) because that right or information no longer relates to an existing or proposed mine, petroleum field or quarry.
 (4) A recalculation under this section must be done using:
 (a) if paragraph (b) does not apply—section 40‑105 (about self‑assessing effective life); or
 (b) if the *depreciating asset is a *mining, quarrying or prospecting right or *mining, quarrying or prospecting information:
 (i) subsections 40‑95(10) and (11) (if the right or information relates to an existing or proposed mine, petroleum field or quarry); or
 (ii) subsection 40‑95(12) (if the right or information no longer relates to an existing or proposed mine, petroleum field or quarry).

Exception: intangibles
 (5) This section does not apply to an intangible *depreciating asset to which an item in the table in subsection 40‑95(7) applies.

40‑115  Splitting a depreciating asset
 (1) If a *depreciating asset you