• Decline in value of depreciating asset used for non-taxable purpose

    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

    The decline in value and adjustable value of a depreciating asset are calculated from the start time independently of your use of the depreciating asset for a taxable purpose. However, your deduction for the decline in value is reduced to the extent your use of the asset is not for a taxable purpose.

    Example

    Deduction for the decline in value of a depreciating asset used partly for non-taxable purposes (ignoring any GST impact)

    Leo purchases a computer for $6,000 and uses it only 50 per cent of the time for taxable purposes during the income year. If the computer's decline in value for the income year is $1,000, Leo's deduction would be reduced to $500, being 50 per cent of the computer's decline in value for the income year. The adjustable value at the end of the income year would be $5,000, irrespective of the extent of Leo's use of the asset for taxable purposes.

    Last modified: 01 Jun 2005QC 27399