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If you acquire a depreciating asset for more than its market value and do not deal at arm's length with another party to the transaction or if you acquire a depreciating asset under a private or domestic arrangement (for example, as a gift from a family member), the first element of cost is the market value of the asset at the time you start to hold it-see GST input tax credits for information on market value.
These rules also apply to the second element of a depreciating asset's cost. For example, if something is done to improve your depreciating asset under a private or domestic arrangement, the second element of the asset's cost is the market value of the improvement when it is made.
Note that there are special rules for working out the effective life and decline in value of a depreciating asset acquired from an associate, such as a spouse or partner-see Depreciating asset acquired from an associate.
Last modified: 01 Jun 2005QC 27399