• Apportionment for exempt usage

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    A notional allowable deduction for depreciation must be reduced if an asset is only partially used for the production of notional assessable income. The normal rules apply in working out the reduction.

    Example 20
    Apportionment of deduction for depreciation

    A CFC purchased a depreciable asset on 1 July 2003 and used it for the production of income. For the statutory accounting period ended 30 June 2004, only 50% of the usage was for the production of notional assessable income. Depreciation, using the diminishing value method, would be worked out as follows.

    Cost at 1 July 2003

    $20,000

    20% depreciation to 30 June 2004

    $4,000

    Written down value at 30 June 2004

    $16,000

    Depreciation in 2003-04 (50% of $4,000)

    $2,000

    Last modified: 05 Dec 2006QC 17522