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INCOME TAX ASSESSMENT ACT 1997 - SECT 40.70 Diminishing value method

INCOME TAX ASSESSMENT ACT 1997 - SECT 40.70

Diminishing value method

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

Start formula Base value times start fraction Days held over 365 end fraction times start fraction 150% over Asset's *effective life end fraction end formula

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

  (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

  (e)   a * telecommunications site access right.

Limit on decline

  (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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