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Before 1 July 2001, certain items of plant that had the same depreciation rate and were used solely for producing assessable income could be allocated to a common-rate pool so a single calculation of deductions could be made.
You cannot allocate depreciating assets to a common-rate pool under the UCA rules. However, if you have allocated plant to a common-rate pool before 1 July 2001, you can continue to claim deductions under the UCA. The pool is treated as a single depreciating asset and the decline in value is worked out using the following rules:
- the diminishing value method must be used
- the opening adjustable value and the cost of the asset on 1 July 2001 is the closing balance of the pool on 30 June 2001
- the effective life component of the diminishing value formula must be replaced with the pool percentage you used before the start of the UCA
- in applying the diminishing value formula for the income year in which the UCA starts, the base value is the opening adjustable value of the asset, and
- any second elements of the cost of assets in the pool are treated as second elements of the cost of the pool.
If a balancing adjustment event occurs for a depreciating asset in the pool or you stop using an asset wholly for taxable purposes, the asset is removed from the pool. The pool is treated as having been split into the removed asset and the remaining pooled items. The removed asset is then subject to the general rules for working out decline in value or balancing adjustment amounts. The cost of the removed asset and the remaining pool is worked out using the rules for working out the cost of a split asset - see Split or merged depreciating assets.
Last modified: 01 Oct 2006QC 27597