CGT and depreciating assets



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The uniform capital allowance system (UCA) applies from 1 July 2001. Unlike the previous capital allowance regime for plant which operated prior to 1 July 2001, a capital gain or capital loss from the disposal of a depreciating asset will only arise to the extent that a depreciating asset has been used for a non-taxable purpose (for example, used privately).

A capital gain or capital loss is calculated using the UCA concepts of cost and termination value and not those found in the CGT provisions (capital proceeds and cost base).

A CGT event (CGT event K7) happens if a balancing adjustment event occurs for a depreciating asset a taxpayer held, and at some time during the period the depreciating asset was held, it was used for a non-taxable purpose.

A balancing adjustment event most commonly occurs for a depreciating asset if a taxpayer stops holding it (for example, it is sold, lost or destroyed) or stops using it.

Last modified: 06 Oct 2009QC 27417