About uniform capital allowances and steps to follow to work out your deduction.
Uniform capital allowances rules
Uniform capital allowances (UCA) provide a set of general rules that apply across a variety of depreciating assets and certain other capital expenditure. UCA do this by consolidating a range of former capital allowance regimes. UCA replace provisions relating to:
- plant
- software
- mining and quarrying
- intellectual property
- forestry roads and timber mill buildings
- spectrum licences.
You use these rules to work out deductions for the cost of your depreciating assets, including those acquired before 1 July 2001. You can generally deduct an amount for the decline in value of a depreciating asset you held to the extent that you used it for a taxable purpose.
However, an eligible small business entity may choose to work out deductions for their depreciating assets using the simplified depreciation rules; see Small business entity concessions.
Steps to work out your deduction
Under UCA, there are a number of steps to work out your deduction for the decline in value of a depreciating asset.
- Is your asset a depreciating asset covered by UCA?
See What is a depreciating asset? - Do you hold the depreciating asset?
See Who can claim deductions for the decline in value of a depreciating asset? - Has the depreciating asset started to decline in value?
See When does a depreciating asset start to decline in value? - What method will you use to work out decline in value?
See Methods of working out decline in value - What is the effective life of the depreciating asset?
See Effective life of a depreciating asset - What is the cost of your depreciating asset?
See Cost of a depreciating asset - Must you reduce your deduction for any use for a non-taxable purpose?
See Decline in value of a depreciating asset used for a non-taxable purpose
Some of these steps do not apply:
- if you choose to allocate an asset to a pool
- if you can claim an immediate deduction for the asset
- to certain primary production assets
- to some assets used in rural businesses.