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Deduction for decline in value of depreciating assets (previously known as depreciation)

Last updated 3 December 2005

Since 1 July 2001, the uniform capital allowance system (UCA) applies to most depreciating assets, including those acquired before that date. The UCA consolidates a range of former capital allowance provisions, including those relating to plant and equipment. It does this by providing a set of general rules that applies across a variety of depreciating assets and certain other capital expenditure. It maintains some concessional tax treatments, such as those applying to primary production capital expenditure and primary production depreciating assets, and also introduces deductions for certain types of capital expenditure that did not previously attract a deduction.

You now work out deductions for the decline in value of your depreciating assets using these rules. You can deduct an amount in relation to a depreciating asset that you held for any period during an income year, equal to its decline in value over that period. However, your deduction is reduced to the extent you use the asset -or have it installed ready for use -for purposes other than that of producing assessable income, for example, a private purpose.