Document ID: chunk:federal_register_of_legislation:C2004A00844:clause:1_10:p3
Version: federal_register_of_legislation:C2004A00844
Segment Type: clause
Provision Reference: sch 1 cl 10 (pt 3/13)
Character Range: 27428–30003

Once you make the choice for an asset, you cannot change it: see section 40‑130.

Note 2: For the diminishing value method, see section 40‑70. For the prime cost method, see section 40‑75.

Note 3: In some cases you do not have to make the choice because you can deduct the asset's cost: see section 40‑80.

Exception: asset acquired from associate

 (2) For a *depreciating asset that you acquire from an *associate of yours where the associate has deducted or can deduct an amount for the asset under this Division, you must use the same method that the associate was using.

Note: You can require the associate to tell you which method the associate was using: see section 40‑140.

Exception: holder changes but user same or associate of former user

 (3) For a *depreciating asset that you acquire from a former *holder of the asset, you must use the same method that the former holder was using for the asset if:
 (a) the former holder or another entity (each of which is the former user) was using the asset at a time before you became the holder; and
 (b) while you hold the asset, the former user or an *associate of the former user uses the asset.

 (4) However, you must use the *diminishing value method if:
 (a) you do not know, and cannot readily find out, which method the former holder was using; or
 (b) the former holder did not use a method.

Exception: low‑value pools

 (5) You work out the decline in value of a *depreciating asset in a low‑value pool under Subdivision 40‑E rather than under this Subdivision.

40‑70  Diminishing value method

 (1) You work out the decline in value of a *depreciating asset for an income year using the diminishing value method in this way:
where:

base value is:
 (a) for the income year in which the asset's *start time occurs—its *cost; or
 (b) for a later year—the sum of its *opening adjustable value for that year and any amount included in the second element of its cost for that year.

days held is the number of days you *held the asset in the income year from its *start time, ignoring any days in that year when you did not use the asset, or have it *installed ready for use, for any purpose.

Note: If you recalculate the effective life of a depreciating asset, you use that recalculated life in working out your deduction.

 You can choose to recalculate effective life because of changed circumstances: see section 40‑110. That section also requires you to recalculate effective life in some cases.

Exception: intangibles

 (2) You cannot use the *diminishing value method to work out the decline in