Capital allowances: $300 immediate deduction tests

Introduction

Under the uniform capital allowance system (UCA), an immediate deduction for assets costing $300 or less is available for certain assets used mainly to produce non-business assessable income. The deduction is not available for any assets used mainly in carrying on a business.

This document explains the tests you need to satisfy to claim the immediate deduction for non-business depreciating assets costing $300 or less.

Under the UCA rules, the immediate deduction is available for depreciating assets you start to hold (for example, buy or receive as a gift) from 1 July 2001 if all of the following 4 tests are satisfied:

Test 1	The cost of the depreciating asset is $300 or less.
Test 2	You use the asset mainly for the purpose of producing assessable income that is not income from carrying on a business.
Test 3	The asset is not part of a set of assets you start to hold in the income year that costs more than $300.
Test 4	The asset is not one of a number of identical or substantially identical assets you start to hold in the income year that together costs more than $300.

If you are not eligible to claim the immediate deduction, you generally work out any deduction for the asset using its effective life. Alternatively, the asset may be allocated to a low-value pool.

For clarification on the terms or concepts used in this document refer to Guide to depreciating assets 2005-06.

Last Modified: Thursday, 9 November 2006