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