Decline in value calculator
Glossary of terms
Balancing adjustment calculations
Acquisition date
For CGT purposes, this is generally the date you become the owner of an asset. Note that in some circumstances, this date may be different from the date that the asset started to decline in value, but is usually the same date that you started to hold an asset. For more information about acquisition dates for CGT purposes, read the Guide to capital gains tax .
Adjustable value
A depreciating asset's adjustable value at a particular time is its cost (first and second elements) less any decline in value up to that time. The opening adjustable value of an asset for an income year is generally the same as its adjustable value at the end of the previous income year.
Balancing adjustment calculations
Balancing adjustment calculations are calculations of the balancing adjustment amount resulting from a balancing adjustment event occurring for a depreciating asset. For example, a calculation of the amount to be included in assessable income or the amount to be included as a deduction from the sale of an asset for which decline in value deductions have been claimed.
Balancing adjustment amount
If an asset's termination value is greater than its adjustable value when a balancing adjustment event occurs, the excess is generally an assessable balancing adjustment amount. If the termination value is less than the adjustable value, the difference is generally a deductible balancing adjustment amount.
Car limit
Cars designed mainly for carrying passengers are subject to a car limit. If the first element of cost exceeds the car limit for the financial year in which you start to hold it, that first element of cost is reduced to the car limit. The car limit for 2011-12 is $57,466.
Note: This
decline in value calculator should not be used if the asset is a car whose first element of
cost exceeds the car limit. If you need help with your calculation, phone 13 28 61 between 8.00am and 6.00pm, Monday to Friday.
Decline in value
Deductions for the cost of a depreciating asset are based its decline in value over its effective life. For most depreciating assets, you have the choice of two methods to work out the decline in value of a depreciating asset: the prime cost method or the diminishing value method.
Low-value pools
Under the uniform capital allowance system (UCA), you can allocate low-cost assets and low-value assets to a low-value pool.
A low-cost asset is a depreciating asset whose cost is less than $1,000 (after GST credits or adjustments) as at the end of the income year in which you start to use it, or have it installed ready for use, for a taxable purpose.
A low-value asset is a depreciating asset:
- that is not a low–cost asset
- that has an opening adjustable value for the current year of less than $1,000, and
- for which you used the diminishing value method to work out any deductions for decline in value for a previous income year.
The following depreciating assets cannot be allocated to a low-value pool:
- low–value assets for which you used the prime cost method to work out any deductions for decline in value for a previous income year
- horticultural plants (including grapevines)
- assets for which you can deduct amounts under the rules for small business entities
- assets that cost $300 or less for which you can claim an immediate deduction, or
- certain depreciating assets used in carrying on research and development activities.
For more information on low-value pools, refer to the Guide to depreciating assets.
Note: This decline
in value calculator should not be used if an asset is allocated to a low-value pool. If you need help with
your calculation, phone 13 28 61 between 8.00am and 6.00pm, Monday to Friday.
Pooled assets
Pooled assets are assets that are allocated to pools – for example, low-value asset pools, common rate pools and project pools. A limited range of assets are eligible to be included in pools.
For more information, see 'Low-value pools' in Guide to depreciating assets.
Note: This
decline in value calculator should not be used for pooled assets. If you need help with your calculation,
phone 13 28 61 between 8.00am and 6.00pm, Monday to Friday.
Small business entity assets
For the 2007–08 and later income years, streamlined provisions for eligible small business entities have replaced the simplified tax system (STS). Broadly, to use the simplified taxation rules a small business entity must carry on business and have an aggregated turnover of less than $2 million.
For more information, see 'Small business entities' in the Guide to depreciating assets.
Note: This decline in value calculator should not be used if you are an eligible small
business entity that chooses to calculate deductions for your depreciating assets using the
simplified depreciation rules for small business entities. If you need help with your
calculation, phone 13 28 66 between 8.00am and 6.00pm, Monday to Friday.
Started to decline in value
This is the date on which you first use the asset, or have it installed ready for use, for any purpose.
Started to hold
For most taxpayers this is the date that you become the owner of the asset. There are some special circumstances where this may be different (for example, you may start to hold an asset by entering into a lease). For more information see the Guide to depreciating assets.
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