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  • Depreciation terms



    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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    Termination value usually arises when you dispose of an item of plant, it is the sale proceeds less any expenses reasonably attributed to the sale. The amount of any GST is excluded from the termination value if the plant is sold as a taxable supply. Special rules apply where:

    • plant is disposed of under a non-arm's length transaction-termination value is its market value
    • plant is lost or destroyed-termination value is the amount or value receivable under an insurance policy or otherwise
    • plant is disposed of other than by sale for example, by gift, bequest or scrapping-termination value is its market value
    • plant becomes trading stock-termination value can be its cost or market value
    • a partial change in the ownership or quasi-ownership of plant occurs-termination value is its market value
    • the plant is a car that is or has been affected by the luxury car lease provisions
    • the plant is a car acquired at a discount under a scheme to avoid the car depreciation limit
    • the plant is a car and its cost exceeds the car depreciation limit
    • the plant is attached to land over which quasi-ownership rights are held and
    • the taxpayer holding the plant that has become a fixture on the land as its quasi-owner, ceases to be its quasi-owner.

    If you are not sure of the termination value of plant for depreciation purposes, contact your professional tax adviser or ring the Australian Taxation Office (ATO).

    Undeducted cost is the cost of the plant less the sum of your depreciation deductions and any further amounts that you could not deduct because you used the plant other than for producing assessable income-for example, private use of the plant or because a deduction is prevented by the income tax law such as for certain plant used for leisure facilities.

    Written down value is generally the cost of the plant less the sum of your depreciation deductions.

    Last modified: 13 Feb 2020QC 27380