• When does a depreciating asset start to decline in value?

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    The decline in value of a depreciating asset starts when you first use it, or install it ready for use, for any purpose including a private purpose. This is known as a depreciating asset's start time.

    Although an asset is treated as declining in value from its start time, a deduction for its decline in value is only allowable to the extent it is used for a taxable purpose (see Glossary ).

    If you initially use a depreciating asset for other than a taxable purpose, such as for a private purpose, and in later years use it for a taxable purpose, you need to work out the asset's decline in value from its start time through the years it was used for a private purpose. You can then work out your deductions for the decline in value of the asset for the years it is used for a taxable purpose - see Decline in value of a depreciating asset used for other than a taxable purpose.

    Last modified: 31 Oct 2005QC 27521