Document ID: chunk:federal_register_of_legislation:C2025C00029:section:10:p4
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 10 (pt 4/17)
Character Range: 871962–874502

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.

Exception: also notionally deductible under R&D provisions
 (6) If:
 (a) only one of the following events has happened:
 (i) you have deducted one or more amounts under this Division for an asset;
 (ii) you have been entitled under section 355‑100 (about R&D) to one or more *tax offsets because you can deduct one or more amounts under section 355‑305 for an asset; but
 (b) later, the other event happens for the asset;
then, for the purposes of working out the deduction for the later event, you must choose the same method that you chose for the first event.
Note 1: Deductions under section 355‑305 (about decline in value of tangible depreciating assets used for R&D activities) are worked out using a notional application of this Division.
Note 2: This subsection applies with changes if you have or could have deducted an amount under former section 73BA of the Income Tax Assessment Act 1936 for the asset (see section 40‑67 of the Income Tax (Transitional Provisions) Act 1997).
 (7) If:
 (a) the events in paragraph (6)(a) could both arise for the same period for an asset; and
 (b) neither event has already arisen for the asset;
then you must choose the same method for the purposes of working out the deduction for each event.

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