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Selling a depreciating asset with other property

Last updated 7 April 2020

If you received an amount for the sale of several items that include a depreciating asset, you need to apportion the amount received between the termination value of the depreciating asset and the other items. The termination value is only that part of what you received that is reasonably attributable to the asset.

The Tax Office generally accepts independent valuations as a basis for this apportionment. However, if there is no independent valuation, you may need to demonstrate that your apportionment of the amount is reasonable. Apportionment on the basis of the market values of the various items for which the amount is received will generally be reasonable.

Example: Depreciating asset sold with other property - ignoring any GST impact

Ben receives $100,000 for the sale of both a chainsaw (a depreciating asset) and a block of land (not a depreciating asset). It would be reasonable to apportion the $100,000 between:

  • the termination value of the chainsaw, and
  • the proceeds of sale for the land

based on the relative market values of the chainsaw and the land.