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Budget outcomes - depreciation

Discussion in 'Accounting, Tax & Legal' started by Nigel Ward, 10th May, 2006.

  1. Nigel Ward

    Nigel Ward Team InvestEd

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  2. Nigel Ward

    Nigel Ward Team InvestEd

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  3. MJK

    MJK Well-Known Member

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    You know what? I'm gonna fess up! :eek: :eek:

    What the #### do they mean by 150% & 200% depreciation? I thought it was more like 10 to 30% per year untill 100% is claimed? :confused:

    MJK
     
  4. Jacque

    Jacque Team InvestEd

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    I found this on the ATO site that helps explain what the diminishing rate of depreciation actually means:

    Under the diminishing value method the deduction is calculated as a percentage of the balance you have left to deduct. The formula for calculating depreciation using the diminishing value method is:

    Opening
    undeducted cost X days owned/365 X 150%/plant’s effective life (in years)

    So this means for a $3000 split system air con purchased which has an effective life of 10 yrs, and is owned for the full tax yr (365 days):

    $3000 x 365/365 x 150%/10 = $450 depreciable Yr 1

    By the 2nd yr the air con has depreciated in value to $2550

    Therefore $2550 x 365/365 x 150%/10 = $382.50 depreciable Yr 2

    and so on.....

    But with the changes to 200% the depreciation is now higher, allowing the item to be depreciated in a shorter period.

    Hope this helps :)
     
  5. Glebe

    Glebe Well-Known Member

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    So Jacque what I guess it means is that you can claim your depreciation in half the time of the useful life of the item?

    ie if the useful life is 10 years, you claim it in 5 years.
     
  6. Jacque

    Jacque Team InvestEd

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    It depends on the amount of the item and the no. of yrs over which it can be allowably depreciated.