• Valuation shortcut 2

    Depreciating assets that have been depreciated on an accelerated basis

    A revised adjustable value can be taken as the market value for all depreciating assets where all of the following apply:

    • they have been depreciated on an accelerated basis
    • their individual adjustable values amount to 1% or less of the joining entity's ACA
    • they are eligible for a deduction under Division 40 of the ITAA 1997, except for the same intangible assets that are not eligible for valuation shortcut 1.

    The revised adjustable value reflects an amount calculated as if the asset had been depreciated at normal rates in accordance with its effective life. This ignores the effect of broad-banding of effective life under the accelerated depreciation provisions and can ignore the effect of a balancing adjustment amount. The effective life is prescribed by the Commissioner, unless the taxpayer has self-assessed the effective life for depreciation purposes.

    To work out the revised adjustable value at the joining time, the taxpayer must recalculate the asset's depreciation from the time it was first depreciated by the joining entity up to the joining time. The taxpayer can also choose to exclude from the adjustable value of the asset any balancing adjustment amount that had reduced the amount available for a depreciating asset's decline in value. The depreciation rates to be used for the recalculation are the applicable standard (that is, non-accelerated) rates that would have applied to that particular asset for the period from the time the asset was first depreciated by the joining entity up to the joining time.

      Last modified: 01 Jul 2015QC 21245