The UCA provides a set of general rules that applies across a variety of depreciating assets and certain other capital expenditure. It does this by consolidating a range of former capital allowance regimes. These regimes were complex and inconsistent, and involved significant replication of parallel but not identical provisions and concepts. Most of these deficiencies are overcome by consolidating capital allowance provisions, including those relating to:
- intellectual property
- forestry roads and buildings
- mining and quarrying
- spectrum licences.
The UCA maintains the treatment of some depreciating assets and capital expenditure such as certain primary production depreciating assets and capital expenditure.
It also introduces new deductions for types of capital expenditure that did not previously attract a deduction, such as certain business and project related costs - refer to Capital expenditure deductible under the UCA.
Deductions for the cost of your depreciating assets, including those acquired before 1 July 2001, are worked out using the UCA rules. You can generally deduct an amount for the decline in value of a depreciating asset you hold to the extent that you use it for a taxable purpose.
However, eligible taxpayers who elect to enter the Simplified Tax System (STS) will generally work out deductions for their depreciating assets under the STS rules - see STS taxpayers.
Steps in working out your deduction
This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.
End of attention
Under the UCA, there are a number of steps in working out your deduction for the decline in value of a depreciating asset:
Some of these steps do not apply:
- if you choose to allocate an asset to a pool
- if you can claim an immediate deduction for the asset
- to certain primary production assets
- to some assets used in rural businesses.
See Working out decline in value.
Last modified: 31 Oct 2005QC 27521