Income Tax Assessment Act 1997
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(d) (Repealed by No 151 of 2020) (e) a * telecommunications site access right.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.
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