Commonwealth Consolidated Acts

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INCOME TAX ASSESSMENT ACT 1997 - SECT 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   40 - C (which is about working out the cost of * depreciating assets);

  with:

    the car's * termination value for the purposes of section   40 - 300 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:

  adjusted by:

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 .


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