See 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. However, if you are able to use accelerated rates of depreciation, you use the relevant percentage rate to work out the decline in value rather than the effective life. See Effective life and Accelerated depreciation.
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. Your deduction may also be reduced if the asset is a leisure facility or a boat. See Decline in value of a depreciating asset used for a non-taxable purpose.
Examples of effective lives from Taxation Ruling TR 2014/4 (from 1 July 2014)
Depreciating asset |
Effective life |
|---|---|
Carpets in commercial office buildings |
8 |
Carpets in ten-pin bowling centres |
4 |
Point of sale assets: cash registers, stand-alone type |
10 |
Computers: generally |
4 |
|
3 |
Curtains and drapes |
6 |
Fire extinguishers |
15 |
Hot water installations for commercial office buildings |
15 |
Lawn mowers: cylinder |
7 |
|
2 |
Libraries (professional) |
10 |
Motor vehicles: cars generally |
8 |
|
5 |
|
4 |
|
6 2/3 |
Office machines and equipment: photo copying machines |
5 |
Point of sale assets: cash registers, standalone type |
10 |
Power tools (hand operated): air or electric |
5 |
|
3 |
Television sets |
10 |