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2-3 Capital Allowances
2-3 Capital Allowances
Calculation of
decline in value
Excludes:
-GST
-amts incurred before 1/07/2001 on dep asset that is not plant
-otherwise deductible s40-215
-amts deductible for mining/quarrying/information prospecting s40-80
-expenses not capital s40-220
Other rules:
-assets brought to partnership, cost=MV s40-180(2) Item 5
-asset acq > arms length value, cost=MV s40-180(2) Item 8
-amt taken to have paid usually MV for non-cash benefits s40-185
-car limit = $57009 s40-230
-when car acq @ discount via a trade-in disposed @ <MV, cost will increase by
the discount s40-225
-cost of depn assets are reasonably allocated when acquire in a lum with other
assets s40-195, s40-115, s40-205
Prime cost or
Prime Cost
diminishing value?
-choice made on an
item-by-item basis,
cannot be changed Diminishing value
Start Time
When asset is first used or installed
ready for use for any purpose
**tax deduction only available for
taxable purposes need to apportion
Yes
Low value assets (37.5%)
-declined in value under
diminishing value with
WDV<$1000
-allocated on item-by-item basis
(no need to pool everything)
Add to LVP
-depreciate o/bal @ 37.5%
-add only proportion for taxable
purpose (% cannot be adjusted later)
Disposal
-deduct termination value from pool
(adj for taxable purpose %)
Calculation
Formula for CG and CL below.
Balancing adj = decline in value for taxable
purpose (if TV>cost) s40-285(1)
*refer to CLP98 for worked example
Capital gain
STS taxpayers
Write-off General STSP
Criteria
<$1000 <25 yrs UL
O/bal
100%
30%
Additions
15%
Effective Life
1) Self-assess assuming it was kept
in good working condition s40-105
or
2) Commissioners determination
s40-100
*refer to s40-95(7) for intangibles
Long-life STSP
>=25 yrs UL
5%
2.50%
Capital loss