Document ID: chunk:federal_register_of_legislation:C2004C00927:clause:1_5:p1
Version: federal_register_of_legislation:C2004C00927
Segment Type: clause
Provision Reference: sch 1 cl 5 (pt 1/3)
Character Range: 41537–44327

5                                                     you dispose of the *car to an insurer because it is lost or destroyed                 the amount or value received or receivable under the insurance policy

20-120  Meaning of notional depreciation

  This is how to work out the notional depreciation for a lease period:

      Method statement
           Step 1. Compare:

                • the *car's *cost to the lessor for the purposes of Subdivision 42-B (which is about working out the cost of *plant for the purposes of depreciation);

            with:

                • the car's *termination value for the purposes of section 42-205 when the lessor disposed of it.

           Step 2. If the car's cost exceeds the car's termination value, multiply the excess by:

                • the number of days in the lease period;

            divided by:

                • the number of days the lessor owned the car.

           Step 3. The result is the notional depreciation for the lease period.
           Step 4. If the car's cost does not exceed the car's termination value, the notional depreciation for the lease period is zero.
Note 1: The notional depreciation for the lease period represents:
  *    the amount you could have deducted for depreciation of the car if, instead of leasing it, you had owned it and used it solely for the purpose of producing assessable income for that period;

 adjusted by:
  *    the balancing adjustment you would have made if you had disposed of the car at the end of that period.

Note 2: The car's cost to the lessor is worked out differently if the lessor acquired it in the 1996-97 income year or an earlier income year: see section 20-105 of the Income Tax (Transitional Provisions) Act 1997.

Note 3: The car's termination value is worked out differently if the lessor disposed of it in the 1996-97 income year or an earlier income year: see section 20-110 of the Income Tax (Transitional Provisions) Act 1997.

The associate case

20-125  Disposal of a leased car for profit

 (1) Your assessable income includes the *profit you make on disposing of a *car if:
 (a) section 20-110 does not include an amount in your assessable income because of the disposal; and
 (b) the car was designed mainly for carrying passengers; and
 (c) the car was leased to you or your *associate; and
 (d) you, your associate or another entity can deduct for the income year any of the lease payments paid or payable by the lessee, or have deducted or can deduct any of them for an earlier income year, under this Act; and
 (e) either:
 (i) you, your associate, or entities including you or your associate, acquired the car from the lessor; or
 (ii) another entity acquired the car from the lessor under an *arrangement that enabled you