The uniform capital allowance system (UCA) applies from 1 July 2001 and replaces the previous capital allowance regime for plant. Under the UCA system, a capital gain or capital loss from the disposal of a depreciating asset will only arise to the extent that the asset has been used for a non-taxable purpose (for example, used for private purposes).
A capital gain or capital loss from a depreciating asset used for a non-taxable purpose is calculated using the UCA concepts of cost and termination value, not the concepts of capital proceeds and cost base found in the CGT provisions.
If a balancing adjustment event occurs for a depreciating asset that you have at some time used for a non-taxable purpose, a CGT event happens (refer to CGT event K7 in appendix 1). The most common balancing adjustment event for a depreciating asset occurs when you stop holding it (for example, you sell, lose or destroy it) or stop using it.