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-B - Core provisions  

Operative provisions

SECTION 40-70   Diminishing value method  

40-70(1)  


You work out the decline in value of a *depreciating asset for an income year using the diminishing value method in this way:


Base value × Days held
365
×               150%              
 Asset's *effective life 

where:

base value is:


(a) for the income year in which the asset's *start time occurs - its *cost; or


(b) for a later year - the sum of its *opening adjustable value for that year and any amount included in the second element of its cost for that year.

days held is the number of days you *held the asset in the income year from its *start time, ignoring any days in that year when you did not use the asset, or have it *installed ready for use, for any purpose.

Note 1:

If you recalculate the effective life of a depreciating asset, you use that recalculated life in working out your deduction.

You can choose to recalculate effective life because of changed circumstances: see section 40-110. That section also requires you to recalculate effective life in some cases.

Note 2:

The effective life of a vessel can change in some cases: see subsection 40-103(2).

Exception: intangibles

40-70(2)  


You cannot use the *diminishing value method to work out the decline in value of:


(a) *in-house software; or


(b) an item of *intellectual property (except copyright in a *film); or


(c) a *spectrum licence; or


(d) a *datacasting transmitter licence; or


(e) a *telecommunications site access right.

Limit on decline

40-70(3)  


The decline in value of a *depreciating asset under this section for an income year cannot be more than the amount that is the asset's *base value for that income year.

View surrounding sectionsView surrounding sectionsBack to top


This information is provided by CCH Australia Limited Link opens in new window. View the disclaimer and notice of copyright.