• Guidelines for using the depreciating assets worksheet

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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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    The depreciating assets worksheet.

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

    Cost: The cost of a depreciating asset includes the first and second elements of cost. You must adjust the cost of an asset in certain circumstances, such as when the first element of a car's cost exceeds the car limit. If you have adjusted the cost of the asset, 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: Generally, a balancing adjustment event occurs for a depreciating asset when you stop holding it (for example, if you sell it) or when you stop using it and you expect never to use it again; see What happens if you no longer hold or use a depreciating asset?

    Termination value: Generally, the termination value is what you receive or are taken to have received 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 generally an assessable balancing adjustment amount. If the termination value is less than the adjustable value, the difference is a deductible balancing adjustment amount. If you use the asset for a non-taxable purpose, you reduce the balancing adjustment amount and a capital gain or capital loss may arise; see Depreciating asset used for a non-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 when 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.

    Taxable use percentage: This is the proportion of your use of a particular depreciating asset for a taxable purpose.

    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 a non-taxable purpose; see Decline in value of a depreciating asset used for a non-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 2011. The worksheet will assist if you have to complete the schedule; see Completing the Capital allowances schedule 2011.

    Examples of effective lives from Taxation Ruling TR 2010/2 (from 1 July 2010)

    Depreciating asset

    Effective life in years

    Carpets

     
    • in commercial office buildings
     

    8

    • in ten-pin bowling centres
     

    4

    Computers

     
    • generally
     

    4

    • laptops
     

    3

    Curtains and drapes

    6

    Fire extinguishers

    15

    Hot water installations for commercial office buildings (excluding commercial boilers and piping)

    15

    Lawn mower

     
    • motor
     

    6 2/3

    • self-propelled
     

    5

    Library (professional)

    10

    Motor vehicles

     
    • cars generally
     

    8

    • hire and travellers' cars
     

    5

    • taxis
     

    4

    • motorcycles and scooters
     

    6 2/3

    Office machines and equipment

     
    • photocopying machines
     

    5

    Point of sale assets

     
    • cash registers, stand-alone type
     

    10

    Power tools (hand operated, air or electric)

    5

    Power tools (hand operated, battery)

    3

    Television receivers

     
    • generally
     

    10

    Tools (loose)

    5

    Vacuum cleaners (electric)

    10

    Accelerated rates of depreciation

    You only use the tables below if you are able to use accelerated depreciation; see 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 accelerated rates are as follows (note that the first three categories are unlikely to apply for currently held items as the rates only apply to items acquired before 1 July 2001 with an effective life of less than seven years):

    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 62/3

    27

    40

    62/3 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 motorcycles the following rates apply (note that the first three categories are unlikely to apply for currently held cars and motorcycles as the rates only apply to items acquired before 1 July 2001 with an effective life of less than seven years):

    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

    22.5

    10 to less than 13

    10

    15

    13 to less than 20

    8

    11.25

    20 to less than 40

    5

    7.5

    40 or more

    3

    3.75

      Last modified: 27 Jun 2012QC 27256