About this guide

As a general rule, you can claim deductions for expenses you incurred in gaining or producing your income (for example, in carrying on a business) but some expenditure, such as the cost of acquiring capital assets, is generally not deductible. However, you may be able to claim a deduction for the decline in value of the cost of capital assets used in gaining assessable income.

Guide to depreciating assets 2016 explains:

  • how to work out the decline in value of your depreciating assets
  • what happens when you dispose of or stop using a depreciating asset, and
  • the deductions you may be able to claim under the uniform capital allowance system (UCA) for capital expenditure other than on depreciating assets.

In this guide, when the words ‘ignoring any GST impact’ are used it should be noted that if you are not entitled to claim an input tax credit for GST for a depreciating asset that you hold, then the cost of the depreciating asset includes any GST paid.

Who should use this guide?

Use this guide if you bought capital assets to use in gaining or producing your assessable income and you would like to claim a deduction for the assets’ decline in value. Also use this guide if you incurred other capital expenditure and want to know whether you can claim a deduction for the expenditure.

Small business entities

Small business entities may choose to use simplified depreciation rules. For more information, see Small business entities.

Publications and services

To find out how to get a publication referred to in this guide and for information about our other services, see More information.

Unfamiliar terms

Unfamiliar terms are shown in bold when first used in this guide. For an explanation of these unfamiliar terms, see Definitions.

    Last modified: 26 May 2016QC 48118