DEPRECIATION AND CAPITAL ALLOWANCES

Course overview

Depreciation is the systematic allocation of an asset’s cost over its useful life. This beginner-level course provides a comprehensive overview of depreciation in both accounting and Australian tax contexts. It explains how businesses and individuals apply depreciation in financial reporting and how the Australian tax system allows deductions for the decline in value of assets. The course covers general depreciation rules (capital allowances) under income tax law, special small-business depreciation concessions, and other specific depreciation provisions, ensuring a solid foundation for practical application in tax and accounting work.

Course objectives:
– Understand the concept and purpose of depreciation in accounting and taxation.
– Learn how Australian tax law (capital allowances) treats the depreciation of business assets over time.
– Identify the key differences between accounting depreciation and tax depreciation methods.
– Become familiar with small business depreciation incentives and special rules (instant asset write-off, pooling, etc.).
– Apply depreciation knowledge to calculate deductions and recognise tax implications of acquiring or disposing of assets.

Learning outcomes:
– Upon completing this course, participants will be able to:
– Define depreciation and explain why businesses depreciate assets.
– Record and calculate depreciation using standard methods (straight-line and diminishing value) for accounting and tax purposes.
– Determine the tax depreciation deductions available for a given asset, including using effective life and appropriate methods.
– Identify eligibility for immediate write-off or pooling of asset costs under current Australian tax rules.
– Evaluate the tax consequences when an asset is sold or disposed of (balancing adjustments) and apply relevant special provisions (e.g. small business concessions, car cost limit, software, “black hole” expenditures).