• Asset used in a non-attributable period

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    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

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    Special rules apply for an asset held by a CFC during a period for which it was either:

    • not necessary to work out the attributable income of the CFC, or
    • not necessary to take depreciation on the asset into account in working out the attributable income of the CFC.

    In such cases, the depreciation rules apply as if the asset were held solely for the production of notional assessable income during the period.

    Example 21
    Deduction for depreciation in non-attributable period

    A CFC purchased a depreciable asset on 1 July 2001 and used it for the production of income. It was not necessary to work out the attributable income of the CFC for the period ending 30 June 2002. For the statutory accounting period ended 30 June 2003, only 50% of the usage was for the production of notional assessable income. In working out the depreciation for the 2002-03 period using the diminishing value method, the first step is to notionally depreciate the asset to the beginning of the income year.

    Cost at 1 July 2001

    $60,000

    20% depreciation to 30 June 2002

    $4,000

    Notional written down value at 30 June 2002

    $16,000

    The next step is to determine the depreciation for the 2002-03 income year

     

    $

    Notional written down value at 30 June 2002

    $16,000

    20% depreciation to 30 June 2003

    $3,200

    Notional written down value at 30 June 2003

    $12,800

    The last step is to apportion the depreciation because the asset is not used wholly for the production of notional assessable income.

    Depreciation in 2002-03 (50% of $3,200)

    $1,600

    Last modified: 05 Dec 2006QC 17522