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Record keeping

Last updated 10 December 2019

You must keep the following information for a depreciating asset:

  • the first and second elements of cost
  • the opening adjustable value for the income year
  • any adjustments made to cost or adjustable value
  • the date you started holding the asset and its start time
  • the rate or effective life used to work out the decline in value
  • the method used to work out the decline in value
  • the amount of your deduction for the decline in value and any reduction for use of the asset other than for a taxable purpose
  • the adjustable value at the end of the income year
  • any recoupment of cost you have included in assessable income
  • if a balancing adjustment event occurs for the asset during the year—the date of the balancing adjustment event, termination value, adjustable value at that time, the balancing adjustment amount, any reduction of the balancing adjustment amount and details of any roll-over or balancing adjustment relief.

You must also keep:

  • details of how you worked out the effective life of a depreciating asset where you have not adopted the effective life determined by the Commissioner
  • if you have recalculated the effective life of an asset – the date of the recalculation, the recalculated effective life, the reason for the recalculation and details of how you worked out the recalculated effective life
  • original documents such as suppliers’ invoices and receipts for expenditure on the depreciating asset.

Additional record keeping requirements apply if you acquire an asset from an associate or if you acquire a depreciating asset but the user is the same or is an associate of the former user, see Depreciating asset acquired from an associate and Holder changes but user same or associate of former user.

Failure to keep proper records will attract penalties.

Low-value pools

For depreciating assets in a low-value pool, you need to keep the following details-some details relate to the assets and some to the pool:

  • the start time of assets in the pool and the date you started holding them
  • the closing pool balance at the end of the previous income year
  • any second elements of cost incurred for the income year for assets in the pool at the end of the previous income year
  • the opening adjustable value of any low-value assets you have allocated to the pool for the income year
  • the first element of cost of any low-cost assets allocated to the pool for the income year
  • the second element of cost of low-cost assets and low-value assets allocated for the income year
  • the taxable use percentage of each amount added to the pool for the income year
  • the termination value and taxable use percentage for any assets in the pool for which a balancing adjustment event occurred during the income year and the date of the balancing adjustment event
  • the closing pool balance
  • the decline in value
  • any amount included in assessable income because the taxable use percentage of the termination value exceeds the closing pool balance
  • any recoupment of cost you have included in assessable income.

Because a capital gain or capital loss may arise when a balancing adjustment event occurs for a depreciating asset you expect to use for a non-taxable purpose, for a depreciating asset you have allocated to a low-value pool and expect to use for a non-taxable purpose, you must keep the following information:

  • the first and second elements of cost
  • termination value
  • the taxable use percentage.

Roll-over relief

If automatic roll-over relief applies, see Roll-over relief-the transferor must give the transferee a notice containing enough information for the transferee to work out how the UCA rules apply to the depreciating asset. Generally, this needs to be done within 6 months of the end of the transferee's income year in which the balancing adjustment event occurred. The transferee must keep a copy of the notice for 5 years after:

  • the asset is disposed of or
  • the asset is lost or destroyed

whatever happens earlier.

If a transferor and transferee jointly choose roll-over relief, the decision must be in writing and must contain enough information for the transferee to work out how the UCA rules apply to the depreciating asset. Generally, the choice needs to be made within 6 months of the end of the transferee's income year in which the balancing adjustment event occurred. The transferor must keep a copy of the agreement for 5 years after the balancing adjustment event occurred. The transferee must keep a copy for 5 years after the next balancing adjustment event that occurs to the asset.

QC27399