Records to keep for a depreciating asset
You must keep records that show all the following information for each depreciating asset:
- the first and second elements of cost
- the opening adjustable value for 2024–25
- any adjustments made to cost or adjustable value
- the date you start holding the asset and its start time
- the rate or effective life you use to work out the decline in value
- the method you use to work out the decline in value
- the amount of your deduction for the decline in value and any reduction for use of the asset for a non-taxable purpose
- the closing adjustable value for 2024–25
- any recoupment of cost you include in assessable income
- if a balancing adjustment event occurs for the asset in 2024–25, show
- the date of the balancing adjustment event
- the termination value
- the adjustable value on the date of the balancing adjustment event
- the balancing adjustment amount
- any reduction of the balancing adjustment amount
- details of any rollover or balancing adjustment relief.
You must also keep:
- details of how you work out the effective life of a depreciating asset where you don't use the effective life determined by the Commissioner
- if you recalculate the effective life of an asset, keep
- the date of the recalculation
- the recalculated effective life
- the reason for the recalculation
- details of how you work out the recalculated effective life
- original documents such as suppliers’ invoices and receipts for expenditure on the depreciating asset.
You must keep additional records if either:
- you acquire an asset from an associate
- you acquire a depreciating asset and either
- the new user is the same as the former user
- the new user is an associate of the former user.
See Depreciating asset you acquire from an associate and Sale and leaseback arrangements.
Failure to keep proper records will attract penalties.
Record keeping for low-value pools
For depreciating assets in a low-value pool, you need to keep all the following details (some details relate to the asset and some to the pool):
- the date you start holding the asset
- the date the asset starts in the low-value pool
- the closing low-value pool balance at the end of 2023–24
- any second element of cost you incur in 2024–25 for assets in the pool at the end of 2023–24
- the opening adjustable value of any low-value asset you allocate to the pool in 2024–25
- the first element of cost of any low-cost asset you allocate to the low-value pool in 2024–25
- the second element of cost of low-cost assets and low-value assets you allocate to the low-value pool in 2024–25
- the taxable use percentage of each amount you add to the pool in 2024–25
- the termination value and the taxable use percentage for assets in the pool for which a balancing adjustment event occurs in 2024–25
- the income year and the date of the balancing adjustment event
- the closing pool balance
- the decline in value
- any amount you include in assessable income because the taxable use percentage of the termination value exceeds the closing pool balance
- any recoupment of cost you include in assessable income.
A capital gain or capital loss may arise when a balancing adjustment event occurs either:
- for a depreciating asset which you expect to use for a non-taxable purpose
- for a depreciating asset which you allocate to a low-value pool and expect to use for a non-taxable purpose.
If either of the above occurs, you must keep records that show the:
- first and second elements of cost
- termination value
- taxable use percentage.
Keep records about a depreciating asset allocated to a low-value pool for 5 years, starting from the end of the income year in which you allocate the asset to the pool.
There are 2 exceptions:
- If an amount is included in the second element of an asset’s cost after the asset is allocated to a low-value pool, keep the records of the cost for a period of 5 years from the time you incur the expenditure.
- Keep records of acquisitions relating to delayed claims for GST input tax credits for at least 5 years after lodgment. If a claim for input tax credits relates to a depreciating asset in a low-value pool, keep the record of acquisition for 5 years from a date which begins later than the end of the income year in which you allocate the asset to the pool.
Record keeping for rollover relief
If automatic rollover relief applies the transferor must give the transferee a notice:
- containing enough information for the transferee to work out how UCA apply to the transferee’s holding of the depreciating asset
- within 6 months after the end of the transferee’s income year in which the balancing adjustment event occurs unless the Commissioner allows a longer period.
The transferee must keep a copy of the notice for 5 years after the asset is:
- disposed of
- lost
- destroyed.
If a transferor and transferee jointly choose rollover relief, the decision must be all the following:
- in writing
- contain enough information for the transferee to work out how UCA or the simplified depreciation rules apply to the transferee’s holding of the depreciating asset
- made within 6 months after the end of the transferee’s income year in which the balancing adjustment event occurred unless the Commissioner allows a longer period.
The transferor must keep a copy of the agreement for 5 years after the balancing adjustment event occurs.
The transferee must keep a copy of the agreement for 5 years after the next balancing adjustment event that occurs for the asset.
Worksheets for depreciating assets and low-value pools
Get the worksheets and worksheet guidelines for depreciating assets and low-value pools.
Worksheet 1: Depreciating assets
Download worksheet 1: Depreciating assets (PDF 50 KB)This link will download a file.
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 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 2 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 Effective life of a depreciating asset. However, if you're able to use accelerated rates of depreciation (for example, under Backing business investment – accelerated depreciation) you use the relevant percentage rate to work out the decline in value rather than the effective life.
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, see Decline in value of a depreciating asset used for a non-taxable purpose. Your deduction may also be reduced if the asset is a leisure facility or a boat.
Worksheet 2: Low-value pool
Download worksheet 2: Low-value pool (PDF 53KB)This link will download a file.
Description of low-value asset: In this column include a brief description of any low-value assets you allocate to the pool for the current year. A low-value asset is a depreciating asset (other than a horticultural plant) that isn't a low-cost asset but that has an opening adjustable value of less than $1,000 worked out using the diminishing value method.
Opening adjustable value of low-value asset: The adjustable value of any depreciating asset at any time is its cost (first and second elements) reduced by any decline in value up to that time. The opening adjustable value of an asset for an income year is generally the adjustable value at the end of the previous income year.
Taxable use percentage: When you allocate an asset to a low-value pool, you must make a reasonable estimate of the percentage of your use of the asset that will be for a taxable purpose over its effective life (for a low-cost asset) or its effective life remaining at the start of the income year it was allocated to the pool (for a low-value asset).
Reduced opening adjustable value of low-value asset: This is the taxable use percentage of the opening adjustable value of any low-value asset you have allocated to the pool for the income year.
Description of low-cost asset or second element of cost of asset in pool: In this column include a brief description of any low-cost assets you allocated to the pool for the income year. A low-cost asset is a depreciating asset (other than a horticultural plant) whose cost (first and second elements) as at the end of the year in which the start time occurred is less than $1,000. Also show in this column a description of any amounts included in the second element of cost of any assets in the pool at the end of the previous year and of any low-value assets allocated for this year. The second element of an asset’s cost is capital expenditure on the asset which is incurred after you start to hold it, such as a cost of improving the asset, see Cost of a depreciating asset.
Cost of low-cost asset and second element of cost: Include the cost after you have made any adjustments, such as for GST input tax credits, see Cost of a depreciating asset.
Reduced cost of low-cost asset or second element of cost: This is the taxable use percentage multiplied by:
- the cost of each low-cost asset you allocated to the pool for the income year
- any amounts included in the second element of cost for the income year for assets in the pool at the end of the previous year
- low-value assets which you allocated to the pool in the current income year.
Balancing adjustment events: Generally, a balancing adjustment event occurs for a depreciating asset if you stop holding it (for example, if you sell it) or 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.
Reduced termination value: This is the taxable use percentage of the asset’s termination value. Use the taxable use percentage you estimated when you allocated the asset to the pool. This reduced termination value decreases the amount of the closing pool balance. If it exceeds the amount of the closing pool balance, make that balance zero and include the excess in assessable income. If you use the asset for a non-taxable purpose, a capital gain or capital loss may arise when a balancing adjustment event occurs for the asset, see Balancing adjustment event for a depreciating asset in a low-value pool.