Income Tax Assessment Act 1997



Division 40 - Capital allowances  

Subdivision 40-B - Core provisions  

Operative provisions

SECTION 40-70   Diminishing value method  

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
×                             150%                            
  Asset ' s *effective life  


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

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

(a)  * in-house software; or


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

(c)  a * spectrum licence; or

(d) (Repealed by No 151 of 2020)


a * telecommunications site access right. Limit on decline


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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