Guide to depreciating assets 2005-06

When does a depreciating asset start to decline in value?

The decline in value of a depreciating asset starts when you first use it, or install it ready for use, for any purpose including a private purpose. This is known as a depreciating asset's start time.

Although an asset is treated as declining in value from its start time, a deduction for its decline in value is only allowable to the extent it is used for a taxable purpose (see Definitions).

If you initially use a depreciating asset for other than a taxable purpose, such as for a private purpose, and in later years use it for a taxable purpose, you need to work out the asset's decline in value from its start time including the years you used it for a private purpose. You can then work out your deductions for the decline in value of the asset for the years you used it for a taxable purpose - see Decline in value of a depreciating asset used for other than a taxable purpose.

Sections within Working out decline in value

• When does a depreciating asset start to decline in value?
• Methods of working out decline in value
• The diminishing value method
• The prime cost method
• Depreciating assets held before 1 July 2001
• Accelerated depreciation
• Decline in value of a depreciating asset used for other than a taxable purpose
• Decline in value of leisure facilities and boats
• Depreciating asset acquired from an associate
• Sale and leaseback arrangements