Diminishing value rate increased from 150 to 200%

[Apocalypse]

The diminishing value rate was increased from 150 to 200% in the last federal budget for assets acquired after May 10 2006 for "business". Does this also include assets used by an individual for business/investment purposes?

http://www.budget.gov.au/2006-07/ministerial/html/treasury-05.htm

It says in the above link under "Improving Australia's depreciation arrangements"

The Government will increase the diminishing value rate from 150 per cent to 200 per cent for depreciating assets. The new rate will apply to eligible assets acquired on or after 10 May 2006, regardless of the asset's effective life.

and later in the last paragraph under "Improving resource allocation" it says

The measure will provide a substantial benefit to both individuals and businesses

And a search of the ATO website reveals this
http://www.ato.gov.au/taxprofessionals/content.asp?doc=/content/74712.htm
which talks only of "taxpayer".

I would interpret that to suggest that it is a uniform measure applicable for individuals as well except where existing special arrangements already apply.

 

[depreciator]

Does this also include assets used by an individual for business/investment purposes?

Well it certainly includes Assets bought by an individual for a rental property. I would assume it applies to all Assets bought by anyone for business/investment purposes. I don't recall any specific exclusions - though wording was pretty general. It was aimed at stimulating spending.

Scott

 

[poppy]

depreciator, does this mean that property investors need to get new depreciation schedules done? I bought my property in late 06 and have already had a depreciation schedule done. Thanks

 

[AmandaBS]

No Poppy you shouldn't need new Depreciation Schedules as this ruling only applies to new assets purchased after 10 May 2006. All items on your Depreciation Schedule as at 10/05/2006 will keep their existing % rates until they are sold or scrapped.

 

[julia]

Poppy,
Even if the quantity surveyor used the old rates that can be changed by your accountant. The accountant is only relying on the QS report for the values not the rate.

Apocalypse,
The 200% applies to all assets depreciated under section 40 which is everything except the special building write off.

Julia
www.bantacs.com.au

 

[geoffw]

This may not work well for everybody.

It means that an asset is depreciated more rapidly in its earlier years, and less rapidly later. In the end, you depreciate the asset 100%, over the same number of years as you did previously.

I don't know if there is a choice into which method you choose. That would make it a bit nicer.

 

[julia]

Geofw,

Yes you can certainly choose what you consider the effective life of the asset and depreciate it at that rate. If it is longer than the ATO recommendation they won't argue. Also you can use the prime cost method to keep it even and slower. The 200% concession only applies to the dimishing method.

Julia
www.bantacs.com.au

 

[geoffw]

OK, thanks Julia.

Another weapon in the arsenal (and I'm not talking about a struggling football club in England )

 

[Apocalypse]

Thanks to all for the imput. I'm thinking about a new laptop next financial year and the numbers look very good when the 'double deduction' strategy includes being able to write-off 2/3 of its value in one year...

 

[julia]

Apocalypse,

If you are talking about how I used to promote that your employer could reimburse you for your laptop and then you could still claim its use as a tax deduction, it doesn't work that way anymore. The ATO withdrew TD 93/145. The laptop is still an exempt Fringe benefit though or you can depreciate the tax related use but not both.

Julia
www.bantacs.com.au

 

[Apocalypse]

Julia, when was that withdrawn? I'll try to search the ATO website but I always find it awkward to navigate...

 

[geoffw]

Julia, when was that withdrawn? I'll try to search the ATO website but I always find it awkward to navigate...

It looks like June 2005

http://law.ato.gov.au/atolaw/view.htm?locid='TXD/TD93145/NAT/ATO'&PiT=99991231235958

Which could leave some us in trouble?

 

[Apocalypse]

What about TD 2005/D17 ? It is only a draft ruling but is appears substantially the same as TD 93/145.

How long does it take for drafts to progress to official determinations? It says it is proposed to apply both before and after the date of any official determination...

 

[Apocalypse]

It appears with C2H5OH-enhanced clarity that because depreciation is now decline-in-value that TD 93/145 is no longer valid but TD 2005/D17 will have pretty much the same effect when it is released and in defiance of the space-time continuum it will apply before it is released but until it is released it won't apply...

 

[julia]

TD 2005/D17 discusses the tax law re write where as TD 93/145 only referred to the old act. Section 20 of the new act does attempt to reduce depreciation under section 40 by any amount reimbursed and now that TD 93/145 has been withdrawn we don't have a leg to stand on. The difference between TD93/145 and TD 2005/D17 is that it points out that it only applies to the 1936 act. At least that is the way I read it and certainly Section 20 seems to have the right stuff to stop this but what a mess having it so far away from the section it applies to and this is the re write to simplify things!

Julia
www.bantacs.com.au