Depreciating after 10 years

Hi Everyone,

I was wondering what to do with the balance of Division 40 plant after 10 years of depreciation?

Can I continue to diminish the balance at say 10% indefinitely or do I claim the full value left at year 10?


MJK
 
Hi Everyone,
Can I continue to diminish the balance at say 10% indefinitely or do I claim the full value left at year 10?
MJK

You certainly can't do the latter (items don't just magically write off once you've owned them for ten years).

I'm a bit puzzled about the former option. Where are you getting 10% from? Division 40 items all depreciate at different percentages, so for a start you couldn't just apply 10% to every item on your schedule.

Long story short: you have to continue depreciating them in exactly the manner you have been.
 
Thanks for your reply.

What do I do if my depreciation schedule only runs for 10 years. There are no figures for the 11 year or subsequent years.?

My accountant in the past has suggested using 10% as a conservative figure which wont get anyone into trouble. Maybe a bit old school. Regardless other views are what I'm after.

I notice the last report/schedule I commissioned went for 20 years but reports/schedules in the past have only been 10 yrs.

MJK
 
Last edited:
They run for 40 years from when they were built post mid-late 1980's.

When was yours built?

That may explain why your schedules runs for 10 years?
 
What do I do if my depreciation schedule only runs for 10 years. There are no figures for the 11 year or subsequent years.?

Ah, I see now. Your original provider should be able to update it for you. Otherwise, unfortunately the answer may well be "a fair amount of mathematics". The amount may depend on whether diminishing value or prime cost has been used.

My accountant in the past has suggested using 10% as a conservative figure which wont get anyone into trouble. Maybe a bit old school.

If fudging figures for a tax return is "old school" then I suppose so. Perhaps it's a bit like me claiming a conservative figure for the laundry of a company-branded shirt that I don't own. But I'm old school like that.
 
Ah, I see now. Your original provider should be able to update it for you. Otherwise, unfortunately the answer may well be "a fair amount of mathematics". The amount may depend on whether diminishing value or prime cost has been used.

Hey Chris,

Are you gonna tell me the last schedule you did for a client went past 20 years mate? Some of us actually hang on to property and don't sell it every five minutes.:) Maybe you've never owned an IP that long?:eek:

MJK
 
Rixter,

Which one. I have several. If you want a specific case this will do...1999.

I'm not really asking about a specific IP rather a general tax depreciation question. The year any of my IPs are built is only applicable to the capital works depreciation not the plant. Am I right?

MJK
 
[QUOTEIf fudging figures for a tax return is "old school" then I suppose so. Perhaps it's a bit like me claiming a conservative figure for the laundry of a company-branded shirt that I don't own. But I'm old school like that.[/QUOTE]

Chris,

I don't mind you trying to tell me what's what but your analogy is a little sharp.

Perhaps if you said you actually "owned the shirt" it would be better because I'm not talking about fictional plant.....just how to treat it. What you have suggested is I am trying to cheat and that's exactly contrary to my intention.

MJK
 
Hey Chris,

Are you gonna tell me the last schedule you did for a client went past 20 years mate? Some of us actually hang on to property and don't sell it every five minutes.:) Maybe you've never owned an IP that long?:eek:

MJK

Ours go for the maximum 40 years. Not often necessary but sometimes useful.

I don't mind you trying to tell me what's what but your analogy is a little sharp.

Perhaps if you said you actually "owned the shirt" it would be better because I'm not talking about fictional plant.....just how to treat it. What you have suggested is I am trying to cheat and that's exactly contrary to my intention.

MJK

I do apologise; I meant it in jest and this was not a dig. However, you do say that your accountant is using conservative figures, which is tantamount to "making it up".
 
40 years is good I have to say.... I'm impressed.

Regarding my old schedules I think I see what my new accountant says. First year with new accountant this year.

I don't really find the idea of getting new schedule made up that palatable. There's got to be a better way?

MJK
 
However said:
I hear what you are saying but a quick look at a schedule and I see nothing being depreciated at a lower rate than 10% in the plant column.... therefore it stands to reason that one would be under claiming rather than over claiming.
I believe that is where my accountant was coming from. We didn't make up the original values. That was done by a quantity surveyor.

MJK
 
If you don't want to get your schedule updated, why don't you just use the written down value and calculate the next years worth of depreciation?
 
Speary,

Well that's what I'm getting at but so far I'm being told I cant do that. I had hoped I could? I was just going to use the written down value and continue to depreciate at low figure of10% but I'm still trying to figure out if that is allowed.

MJK
 
I don't really find the idea of getting new schedule made up that palatable. There's got to be a better way?

If your original provider is still around then they might be able to re-do it cheaply or for free. If not then you either have to do the maths (I would suggest putting this to your accountant first) or have it re-done.

I hear what you are saying but a quick look at a schedule and I see nothing being depreciated at a lower rate than 10% in the plant column.... therefore it stands to reason that one would be under claiming rather than over claiming.
I believe that is where my accountant was coming from. We didn't make up the original values. That was done by a quantity surveyor.

Whether you're under-claiming or over-claiming the following is true: the values are fictional. I suppose at least with the former you might not get into trouble but personally I'd be taking the deductions I'm entitled to.

I think your quantity surveyor's report is not the length is should have been.

Alas, ten to fifteen years ago, most depreciation schedules (including ours) only covered ten years. It was just the way it was done back then.

Well that's what I'm getting at but so far I'm being told I cant do that. I had hoped I could? I was just going to use the written down value and continue to depreciate at low figure of10% but I'm still trying to figure out if that is allowed.
MJK

In all honesty, I don't know if it's that you can't do that. I have no idea what the ramifications, if any, would be if the ATO caught you underclaiming using illegitimate figures. Possibly they'd just scratch their heads. What I can say is that using a blanket 10% is not correct, especially if you were, say, depreciating an oven using the prime cost method, which would be 8.3%.
 
Alas, ten to fifteen years ago, most depreciation schedules (including ours) only covered ten years. It was just the way it was done back then.

All mine back then (and now) have been 40 years schedules. I must have just been pointed in the right direction straight off from another investor.
 
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