20 (Capital Write-Offs and Allowances)[1]

Pre 10 may 2006 assets post 9 may 2006 assets prime

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Pre 10 May 2006 assets Post 9 May 2006 assets Prime cost method Base value Days held 365 X 150% Asset’s effective life X Base value X Days held 365 X 200% Asset’s effective life Asset’s cost X Days held 365 X 100% Asset’s effective life
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Foundations of Taxation Law [¶20.2](f) © CCH Australia Limited Balancing adjustments Balancing adjustments Balancing adjustments are required to be made  where a “balancing adjustment event” arises, eg  when an entity: Stops holding a depreciating asset Stops using a depreciating asset for any purpose  and expects never to use it again Has not used a depreciating asset and decides  never to use it, or Changes its interests or holding in a depreciating  asset
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Foundations of Taxation Law [¶20.2](g) © CCH Australia Limited Balancing adjustments (cont) Balancing adjustments (cont) Termination  value Adjustable  value > Difference included  in the entity’s assessable income = Termination  value Adjustable  value < Difference is deductible  to the entity = “Termination value” is usually the amount the entity is  taken to have received in respect of the balancing  adjustment event The “adjustable value” is broadly the assets written  down value under the DVM or PCM
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Foundations of Taxation Law [¶20.2](h) © CCH Australia Limited Special rules Special rules Low cost asset rules Pooling of assets costing, or having an opening  adjustable value, of less than $1,000 Assets costing less than $300 are deemed to have a  decline in value equal to their cost Small business entity pooling rules Small business entities are able to pool depreciating  assets costing more than $1,000 Small business entity immediate deduction rules Small business entities entitled to an immediate  deduction for assets costing less than $1,000
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