Document ID: chunk:federal_register_of_legislation:C2025C00029:section:10:p6
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 10 (pt 6/17)
Character Range: 876696–879340

*depreciating asset for an income year using the prime cost method in this way:
where:
where:
days held has the same meaning as in subsection 40‑70(1).
Example: Greg acquires an asset for $3,500 and first uses it on the 26th day of the income year. If the effective life of the asset is 31/3 years, the asset would decline in value in that year by:
 The asset's adjustable value at the end of the income year is:
 (2) However, you must adjust the formula in subsection (1) for an income year (the change year):
 (a) for which you recalculate the *depreciating asset's *effective life; or
 (b) after the year in which the asset's start time occurs and in which an amount is included in the second element of the asset's *cost; or
 (c) for which the asset's *opening adjustable value is reduced under section 40‑90 (about debt forgiveness); or
 (d) in which the *remaining effective life of the asset is calculated under section 40‑103; or
 (e) for which there is a reduction to the asset's opening adjustable value under paragraph 40‑365(5)(b) (about involuntary disposals) where you are using the prime cost method; or
 (f) for which the opening adjustable value of the asset is modified under subsection 27‑80(3A) or (4), 27‑85(3) or 27‑90(3); or
 (g) for which there is a reduction in the asset's opening adjustable value under section 775‑70; or
 (h) for which there is an increase in the asset's opening adjustable value under section 775‑75.
The adjustments apply for the change year and later years.
Note 1: For recalculating a depreciating asset's effective life: see section 40‑110.
Note 2: You may also adjust the formula for an income year if you had undeducted core technology expenditure for the asset at the end of your last income year commencing before 1 July 2011 (see section 355‑605 of the Income Tax (Transitional Provisions) Act 1997).
Note 3: Subdivision 40‑BA or 40‑BB of the Income Tax (Transitional Provisions) Act 1997 may also require you to adjust the formula: see subsections 40‑135(3) and 40‑180(2) of that Act.
 (3) The adjustments are:
 (a) instead of the asset's *cost, you use its *opening adjustable value for the change year plus the amounts (if any) included in the second element of its cost for that year; and
 (b) instead of the asset's *effective life, you use its *remaining effective life.
 (4) The remaining effective life of a *depreciating asset is any period of its *effective life that is yet to elapse as at:
 (a) the start of the change year; or
 (b) in the case of a roll‑over under section 40‑340—the time when the *balancing adjustment event occurs for the transferor.
Note: Effective life is