INCOME TAX ASSESSMENT ACT 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-10 - CAPITAL ALLOWANCES: RULES ABOUT DEDUCTIBILITY OF CAPITAL EXPENDITURE  

Division 40 - Capital allowances  

Subdivision 40-E - Low-value and software development pools  

Operative provisions

SECTION 40-440   How you work out the decline in value of assets in low-value pools  

40-440(1)  
You work out the decline in value of * depreciating assets in a low-value pool for an income year in this way:


Step 1.

Work out the amount obtained by taking 18 ¾ % of the taxable use percentage of the * cost of each * low-cost asset you allocated to the pool for that year. Add those amounts.


Step 2.

Add to the step 1 amount 18 ¾ % of the taxable use percentage of any amounts included in the second element of the * cost for that year of:

  • (a) assets allocated to the pool for an earlier income year; and
  • (b) * low-value assets allocated to the pool for the * current year.

  • Step 3.

    Add to the step 2 amount 37 ½ % of the sum of:

  • (a) the * closing pool balance for the previous income year; and
  • (b) the taxable use percentage of the * opening adjustable values of * low-value assets, at the start of the income year, that you allocated to the pool for that year.

  • Step 4.

    The result is the decline in value of the * depreciating assets in the pool.

    40-440(2)  
    The closing pool balance of a low-value pool for an income year is the sum of:


    (a) the * closing pool balance of the pool for the previous income year; and


    (b) the taxable use percentage of the * costs of * low-cost assets you allocated to the pool for that year; and


    (c) the taxable use percentage of the * opening adjustable values of any * low-value assets you allocated to the pool for that year as at the start of that year; and


    (d) the taxable use percentage of any amounts included in the second element of the cost for the income year of:


    (i) assets allocated to the pool for an earlier income year; and

    (ii) low-value assets allocated to the pool for the * current year;

    less the decline in value of the * depreciating assets in the pool worked out under subsection (1).

    Note:

    The closing pool balance may be reduced under section 40-445 if a balancing adjustment event happens.


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