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PC Effective Life Adjustment

For the PC Effective Life Adjustment tab to be active, the asset must:

  • Not be allocated to a pool,

  • Have been purchased in a prior year, and

  • Use the prime cost method of depreciation.

The details recorded on the PC Effective Life Adjustment are:

Was effective life calculated this year?Answer Yes or No the this question.
Adjusted cost baseEnter the amount of the adjusted cost base for the asset determined by the prime cost method.
Remaining effective life at adjustmentEnter the number of years of effective life that the asset is expected to have.

Calculating New Effective Life for Plant

Taxpayers, other than small business taxpayers, now have the option to calculate a new effective life for plant acquired after 11.45 a.m. AEST on 21 September 1999 (time of announcement). Small business taxpayers will maintain access to accelerated depreciation.

This law permits taxpayers to vary, either up or down, the effective life of plant acquired after the time of announcement. This measure is designed to allow taxpayers to have regard to changing market or technological developments, or other factors connected with usage, that influence the length of time over which an asset can be used to produce income.

The ability to vary effective life is available to taxpayers regardless of whether they have originally assessed an asset's effective life or adopted an effective life from the Commissioner's schedule.

Under the new law taxpayers can adopt a new effective life if changes to circumstance, such as market development, reveal a previous estimate to be inaccurate. Previously, taxpayers did not have this flexibility.

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