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Depreciation - New Terminology

April 2003

The latest example of new tax legislation to cause a headache for taxpayers is the abolition of the depreciation provisions in the Income Tax Assessment Act 1997 and their replacement by the Uniform Capital Allowances provisions. These new provisions, which apply for the tax returns of the financial year ending on 30 June 2002, are contained in Division 40 of the Income Tax Assessment Act 1997.

Division 40 has replaced the conventional terminology relating to "depreciation" with a new Australian tax law jargon, as highlighted by the examples of the lexicon set out in the Table below.

Is it any wonder that a multitude of pen-pushing tax bureaucrats in Canberra spend all their time issuing interpretative determinations and rulings just to explain the meaning of new tax legislation?

Old Terminology New Terminology

depreciation

cost


change in ownership

income producing use

luxury car limit

own

plant

sale proceeds

written down value

"decline in value" (40-25)

"first element and second element of cost"
(40-180(1)(b) and 40-190(1))

"balancing adjustment event" (40-295)

"taxable purpose" (40-25(7))

"car limit" (40-230)

"hold" (40-40)

"depreciating asset" (40-30)

"termination value" (40-300)

"adjustable value" (40-85)
© Copyright BALDWINS Australian Lawyers and Consultants April 2003

For further information, contact Joe Lederman at BALDWINS, Australian Lawyers & Consultants.

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