• Guidelines for using the depreciating assets worksheet

    Worksheet 1 - depreciating assets

    Primary production and Non-primary production - Use a separate worksheet for each category.

    Cost - The cost of a depreciating asset includes the first and second elements of cost. The cost of an asset can be adjusted in certain circumstances, such as if the first element of a car's cost exceeds the car limit. If the cost of the asset has been adjusted, include the adjusted cost in this column - see The cost of a depreciating asset.

    Opening adjustable value and Adjustable value at end of year - The adjustable value of a depreciating asset at any time is its cost reduced by any decline in value up to that time. The opening adjustable value of an asset for an income year is generally the same as its adjustable value at the end of the previous income year.

    Balancing adjustment events - A balancing adjustment event occurs for a depreciating asset if you stop holding it (for example, if you sell it) or you stop using it - see What happens if you no longer hold or use a depreciating asset?.

    Termination value - Generally, the termination value is what you receive for the asset as a result of a balancing adjustment event, such as the proceeds from selling the asset - see Termination value.

    Balancing adjustment amounts - If the asset's termination value is greater than its adjustable value, the excess is an assessable balancing adjustment amount. If the termination value is less than the adjustable value, the difference is a deductible balancing adjustment amount. If the asset is used for other than a taxable purpose, the balancing adjustment amount is reduced and a capital gain or capital loss may arise - see Depreciating asset used for other than a taxable purpose.

    Balancing adjustment relief - This refers to the offsetting of otherwise assessable balancing adjustment amounts for involuntary disposals - see Involuntary disposal of a depreciating asset- or if rollover relief applies - see Rollover relief.

    Decline in value - There are two methods of working out the decline in value of a depreciating asset - prime cost and diminishing value - see Methods of working out decline in value.

    Effective life and Percentage rate - Both the prime cost and diminishing value methods are based on a depreciating asset's effective life - see Effective life. However, if you are able to use accelerated rates of depreciation - see Accelerated depreciation.- you use the relevant percentage rate to work out the decline in value rather than the effective life.

    A list of accelerated rates is provided - see Accelerated rates of depreciation.

    Percentage of taxable use - This is the percentage of your taxable use (for example, income producing use) of the asset during the income year.

    Deduction for decline in value - Your deduction for the decline in value of the asset is the decline in value reduced to the extent you used the asset for other than a taxable purpose - see Decline in value of a depreciating asset used for other than a taxable purpose. Your deduction may also be reduced if the asset is a leisure facility or a boat.

    The letters G, H, I, J and K on the worksheet correspond to labels on the Capital allowances schedule 2004. The worksheet will assist if you have to complete the schedule - seeCompleting the Capital allowances schedule 2004.

    Examples of effective lives - from Taxation Ruling TR 2000/18

    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

    Depreciating asset

    Effective life in years given in TR 2000/18 (as at 1 July 2003)

    Carpets

     
    • in business places, picture theatres, hotels, etc
     

    5

    • in houses let furnished
     

    10

    • in professional chambers
     

    10

    • in ten-pin bowling centres
     

    4

    Cash registers

    6 2/3

    Computers

     
    • generally
     

    4

    • laptops
     

    3

    Curtains and drapes

    6 2/3

    Fire extinguishers

    13 1/3

    Furniture

    13 1/3

    Hot water installations

    20

    Lawn mower

     
    • motor
     

    6 2/3

    • self propelled
     

    5

    Library (professional)

    10

    Motor vehicles, etc

     
    • cars
     
     
    • generally
     

    8

    • hire and travellers' cars
     

    5

    • taxis
     

    4

    • motor cycles and scooters
     

    6 2/3

    Ovens - microwave

    6 2/3

    Photocopying machines

    5

    Power tools (hand operated)

    5

    Refrigerators

    20

    Televisions (not used for hire)

    10

    Tools (loose)

    5

    Vacuum cleaners (electric)

    10

    Washing machines

    6 2/3

    For houses and flats let

     

    furnished only:

     
    • blinds, venetian
     

    20

    • electric clock
     

    13 1/3

    • electric heater
     

    10

    • garbage units (compacting)
     

    6 2/3

    • refrigerators
     

    13 1/3

    • stoves
     

    20

    Accelerated rates of depreciation

    You only use these tables if you are able to use accelerated depreciation. You use the rate that corresponds to the effective life of the item of plant. The following tables show the appropriate rates.

    For most general items of plant the rates are as follows.

    Effective life in years

    Prime cost rate %

    Diminishing value rate %

    Less than 3

    100

    -

    3 to less than 5

    40

    60

    5 to less than 6 2/3

    27

    40

    6 2/3 to less than 10

    20

    30

    10 to less than 13

    17

    25

    13 to less than 30

    13

    20

    30 or more

    7

    10

    For most cars and motor cycles the following rates apply.

    Effective life in years

    Prime cost rate %

    Diminishing value rate %

    Less than 3

    100

    -

    3 to less than 5

    33

    50

    5 to less than 6 2/3

    20

    30

    6 2/3 to less than 10

    15

    30

    10 to less than 13

    17

    25

    13 to less than 20

    13

    20

    20 to less than 40

    5

    7.5

    40 or more

    3 3

    75

    Last modified: 31 Oct 2005QC 27521