• Basis for depreciation

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    Generally, the normal depreciation rules apply for working out the attributable income of a CFC. This means you can choose to depreciate assets by the diminishing value method or the prime cost method. In addition, the rates of depreciation that apply for working out taxable income will also apply in working out attributable income.

    Example 19
    Deduction for depreciation

    A CFC purchased a depreciable asset on 1 July 2003 and uses it solely for the production of notional assessable income. For the statutory accounting period ended 30 June 2004, depreciation would be worked out as follows using the diminishing value method.

    Cost at 1 July 2003

    $20,000

    Depreciation - 20% X 20,000

    $4,000

    Written down value at 30 June 2004

    $16,000

    Depreciation in 2003-04

    $4,000

    Last modified: 05 Dec 2006QC 17522