You can generally claim depreciation based on the cost of the item to you. However, as indicated in the section Adjustments to cost for depreciation purposes, the Commissioner may limit this cost for working out depreciation having regard to certain matters-for example, whether the seller and purchaser are associated parties and the market value of the plant.
Depreciated items included in the sale of other property
If the depreciated item is included with the sale of other property-for example, real estate-and a separate value is not specified in the sale agreement, you can claim depreciation based on the part of the overall cost that can reasonably be attributed to the item. The ATO generally accepts independent valuations as a basis for this attribution. However, if there is no independent valuation, you may need to demonstrate that your estimate provided a reasonable value. Considerations would include the market value of the plant itself, compared to the total purchase price of the property.