• Guidelines for using the low-value pool worksheet

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    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

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    A worksheet is provided to assist you with low value pool assets.

    Description of low-value asset - In this column include a brief description of any low-value assets you allocated to the pool for the current year. A low-value asset is a depreciating asset (other than a horticultural plant) that is not 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 a 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 a 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 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 The 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 The cost of a depreciating asset.

    Reduced cost of low-cost asset or second element of cost - This is the taxable use percentage of the cost of low-cost assets you allocated to the pool for the income year or the taxable use percentage of any amounts included in the second element of cost of assets in the pool at the end of the previous year and of low-value assets allocated to the pool for this year.

    Balancing adjustment events - Generally, a balancing adjustment event occurs in relation to 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. You use the taxable use percentage you estimated when you allocated the asset to the pool. This reduced termination value reduces the amount of the closing pool balance. If it exceeds the amount of the closing pool balance, reduce that balance to zero and include the excess in assessable income. If you use the asset for other than a 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.

    The letters L, M, N, O, P and Q on the worksheet correspond to labels on the Capital allowances schedule 2005  . The worksheet will assist if you have to complete the schedule - see Completing the Capital allowances schedule 2005.

    Last modified: 01 Oct 2006QC 27597