ACCA Taxation (F6) Practice Exam

What is the time limit for electing to de-pool short life assets?

1. 31 January - 18 months after relevant tax year ends

2. 31 January - 22 months after relevant tax year ends

3. 31 January - 24 months after relevant tax year ends

4. 31 January - 20 months after relevant tax year ends

The correct answer is: 31 January - 22 months after relevant tax year ends

The correct answer indicates that the time limit for electing to de-pool short life assets is 31 January - 22 months after the relevant tax year ends. This timeline is significant for businesses that hold short life assets, as it allows them to make decisions regarding the treatment of these assets for tax purposes within a specified period. Short life assets are assets that have a relatively rapid depreciation, and the ability to de-pool them allows taxpayers to simplify their capital allowances claims. The deadline of 31 January - 22 months following the end of the relevant tax year provides a window of opportunity for businesses to assess their capital assets' performance and make necessary elections in their tax returns without facing penalties or complications. In the context of the options provided, the other timeframes do not align with the current regulations regarding short life asset elections. Each alternative suggests differing time limits, indicating misunderstanding of the current rules governed by tax law. Thus, the established deadline of 31 January - 22 months remains crucial for compliance and effective tax planning for entities dealing with short life assets.