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D Capital works deductions

Last updated 12 February 2019

Show at D the deduction claimed for capital expenditure on special buildings, which includes eligible capital expenditure on extensions, alterations or improvements. Exclude capital expenditure for mining infrastructure buildings and timber milling buildings.

Further Information

For more information on capital works deductions, see Appendix 1: Capital works deductions.

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E Deduction for decline in value of depreciating assets

Show at E the deduction for decline in value of depreciating assets for tax purposes.

Complete and attach a Capital allowances schedule 2011 if the amount you show at E is more than $100,000.

Further Information

For more information, see the Capital allowances schedule instructions 2011.

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The decline in value of a depreciating asset is generally worked out using either the prime cost or diminishing value method. Both methods are based on the effective life of an asset. For most depreciating assets, the fund can choose whether to self-assess the effective life or to adopt the Commissioner's determination which can be found in Taxation Ruling TR 2010/2 Income tax: effective life of depreciating assets (applicable from 1 July 2010).

The fund can deduct an amount equal to the decline in value for an income year of a depreciating asset that it held for any time during that year. However, the deduction is reduced to the extent that the fund uses it or has it installed ready for use for other than a taxable purpose.

The decline in value of a depreciating asset costing $300 or less is its cost (but only to the extent the asset is used for a taxable purpose) if the asset satisfies all of the following requirements:

  • it is used predominantly for the purpose of producing assessable income that is not income from carrying on a business
  • it is not part of a set of assets acquired in the same income year that costs more than $300, and
  • it is not one of any number of substantially identical items acquired in the same income year that together cost more than $300.

The decline in value of certain assets with a cost or opening adjustable value of less than $1,000 can be calculated through a low-value pool. Assets eligible for the immediate deduction cannot be allocated to a low-value pool.

Further Information

For an explanation of the concepts and terms mentioned above, and for more information on deductions for decline in value, see the Guide to depreciating assets 2011.

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