Record keeping for depreciating assets

Records to keep for a depreciating asset

You must keep records which show the following information for each depreciating asset:

• the first and second elements of cost
• the opening adjustable value for 2023–24
• any adjustments made to cost or adjustable value
• the date you started holding the asset and its start time
• the rate or effective life used to work out the decline in value
• the method used to work out the decline in value
• the amount of your deduction for the decline in value and any reduction for use of the asset for a non-taxable purpose
• the closing adjustable value for 2023–24
• any recoupment of cost you have included in assessable income, and
• if a balancing adjustment event occurred for the asset in 2023–24
  • the date of the balancing adjustment event
  • the termination value
  • the adjustable value on the date of the balancing adjustment event
  • the balancing adjustment amount
  • any reduction of the balancing adjustment amount, and
  • details of any rollover or balancing adjustment relief.

You must also keep:

• details of how you worked out the effective life of a depreciating asset where you have not adopted the effective life determined by the Commissioner
• if you have recalculated the effective life of an asset
  • the date of the recalculation
  • the recalculated effective life
  • the reason for the recalculation, and
  • details of how you worked out the recalculated effective life
• original documents such as suppliers’ invoices and receipts for expenditure on the depreciating asset.

You must keep additional records if:

• you acquire an asset from an associate, or
• you acquire a depreciating asset and
  • the new user is the same as the former user, or
  • the new user is an associate of the former user.

See Depreciating asset acquired from an associate and Sale and leaseback arrangements.

Failure to keep proper records will attract penalties.

Record keeping for low-value pools

For depreciating assets in a low-value pool, you need to keep the following details (some details relate to the asset and some to the pool):

• the date you started holding the asset
• the date the asset started in the low-value pool
• the closing low-value pool balance at the end of 2022–23
• any second element of cost you incurred in 2023–24 for assets in the pool at the end of 2022–23
• the opening adjustable value of any low-value asset you allocated to the pool in 2023–24
• the first element of cost of any low-cost asset you allocated to the low-value pool in 2023–24
• the second element of cost of low-cost assets and low-value assets you allocated to the low value pool in 2023–24
• the taxable use percentage of each amount added to the pool in 2023–24
• the termination value and the taxable use percentage for assets in the pool for which a balancing adjustment event occurred in 2023–24
• the income year and the date of the balancing adjustment event
• the closing pool balance
• the decline in value
• any amount included in assessable income because the taxable use percentage of the termination value exceeds the closing pool balance, and
• any recoupment of cost you have included in assessable income.

A capital gain or capital loss may arise when a balancing adjustment event occurs either:

• for a depreciating asset which you expect to use for a non-taxable purpose
• for a depreciating asset which you have allocated to a low-value pool and expect to use for a non-taxable purpose.

If either of the above occurs, you must keep records which show:

• the first and second elements of cost
• the termination value
• the taxable use percentage.

Keep records about a depreciating asset allocated to a low-value pool for 5 years, starting from the end of the income year in which the asset was allocated to the pool.

There are 2 exceptions:

• If an amount is included in the second element of an asset’s cost after the asset is allocated to a low-value pool, keep the records of the cost for a period of 5 years from the time you incurred the expenditure.
• Keep records of acquisitions relating to delayed claims for GST input tax credits for at least 5 years after lodgment. If a claim for input tax credits relates to a depreciating asset in a low-value pool, keep the record of acquisition for 5 years from a date which begins later than the end of the income year in which the asset was allocated to the pool.

Record keeping for rollover relief

If automatic rollover relief applies the transferor must give the transferee a notice:

• containing enough information for the transferee to work out how UCA apply to the transferee’s holding of the depreciating asset
• within 6 months after the end of the transferee’s income year in which the balancing adjustment event occurred.

The transferee must keep a copy of the notice for 5 years after the asset is:

• disposed of
• lost, or
• destroyed.

If a transferor and transferee jointly choose rollover relief, the decision:

• must be in writing, and
• must contain enough information for the transferee to work out how UCA apply to the transferee’s holding of the depreciating asset
• must be made within 6 months after the end of the transferee’s income year in which the balancing adjustment event occurred.

The transferor must keep a copy of the agreement for 5 years after the balancing adjustment event occurred.

The transferee must keep a copy of the agreement for 5 years after the next balancing adjustment event that occurred for the asset.

Continue to: Definitions for UCA terms

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