• Used mainly to produce non-business assessable income

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    Some examples of depreciating assets used to produce non-business income are:

    • a briefcase or tools of trade used by an employee
    • freestanding furniture in a rental property, and
    • a calculator used in managing an investment portfolio.

    To claim the immediate deduction, you must use the depreciating asset more than 50% of the time for producing non-business assessable income.

    If you meet this test, you can use the asset for other purposes (such as to carry on a business) and still claim the deduction. However, if you use the asset mainly for producing non-business assessable income, but you also use the asset for other than a taxable purpose, then the amount of deduction must be reduced by the amount attributable to the use for other than a taxable purpose.

    Example: Depreciating asset used mainly to produce non-business assessable income - ignoring any GST impact

    Rob buys a calculator for $150. The calculator is used 40% of the time by him in his business and 60% of the time for managing his share portfolio. As the calculator is used more than 50% of the time for producing non-business assessable income, Rob can claim an immediate deduction for it of $150.

    If Rob used his calculator 40% of the time for private purposes and 60% of the time for managing his share portfolio, he is still using the calculator more than 50% of the time for producing non-business assessable income. However, his deduction would be reduced by 40% to reflect his private use of the asset.

    Last modified: 27 Aug 2007QC 27892