• Sale of a depreciable asset

    Attention

    Warning:

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

    End of attention

    Under the normal operation of the Act, a deduction for the difference may be allowed where an asset is sold for less than the notional depreciated value of the asset. This deduction is also allowable in working out the attributable income of a CFC.

    Example 22
    Deduction on disposal

    In the next statutory accounting period the depreciable asset in example 22 was again used for 50% of the time to derive notional assessable income. At the end of the year it was sold for $9,000. The depreciation calculation would be as follows.

    Notional written down value at 30 June 2003

    $12,800

    20% depreciation to 30 June 2004

    $2,560

    Notional written down value at 30 June 2004

    $10,240

    Proceeds of sale

    $9,000

    Notional loss

    $1,240

    Depreciation in 2003-04 (50% of $2,560)

    $1,280

    Deduction for loss (50% of $1,240)

    $620

    An amount may also be included in notional assessable income as a result of the sale of the asset.

    Example 23
    Notional assessable income on disposal

    Assume that the asset was sold for $18,000. In this case an amount would be included in notional assessable income as follows.

     

    $

    Cost at 1 July 2001

    20,000

    Depreciation allowed

    2,800

    Actual written down value at 30 June 2004

    17,120

    Proceeds of sale

    18,000

    Actual written down value

    17,120

    Notional assessable income on disposal

    880

    Contact the tax office where you lodge your return for further details.

    Last modified: 05 Dec 2006QC 17522