Working out decline in value

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This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

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From 1 July 2001, deductions for the decline in value of most depreciating assets, including those acquired before that date, are worked out under the UCA rules.

The UCA contains general rules for working out the decline in value of a depreciating asset and those rules are covered in this part of the guide. Transitional rules apply to depreciating assets held before 1 July 2001 so you can work out their decline in value using these rules - see Depreciating assets held before 1 July 2001.

The general rules do not apply to some depreciating assets. The UCA provides specific rules for working out deductions for the assets listed below:

• certain depreciating assets which cost $300 or less that are used mainly to produce non-business assessable income - see Immediate deduction (for certain non-business depreciating assets costing $300 or less)
  
• certain depreciating assets that cost or are written down to less than $1,000 - see Low-value pools
  
• in-house software for which expenditure has been allocated to a software development pool - see Software development pools
  
• depreciating assets used in exploration or prospecting - see Mining and quarrying and minerals transport
  
• water facilities and horticultural plants (including grapevines) - see Primary production depreciating assets
  
• certain depreciating assets of primary producers, other landholders and rural land irrigation water providers used in landcare operations - see Landcare operations, and
  
• certain depreciating assets of primary producers and other landholders used for electricity connections or phone lines - see Electricity connections and phone lines.

There are also specific rules for working out deductions for depreciating assets used in carrying on research and development activities - see the Research and development tax concession schedule instructions 2007 (NAT 6709-6.2007) for more information.