TOPIC THREE - Uniform Capital Allowances

It is suggested that you follow the setting out of the answers as provided here. Make sure
you provide a reason for excluding an item.

Question 1 - Sharon

EXISTING ASSETS AND NEW ASSETS

YEAR ITEM CP OAV RATE

1 Computer 2,000 25%

2 Computer 2,000 1,611 25%

3 Computer 2,000 1,208 25%

New Computer 4,320 50.0%
(i.e. 200%/4 years)
Remember - PC is 100%/effective life and DV is 200%/Effective life

Question 2 - Valery Vamp

EXISTING ASSETS AND NEW ASSETS

ITEM CP OAV RATE

1/07 Furniture 2,300 1,000 10%
1/07 Carpets 4,200 1,500 40%
1/07 Cloth. Mach A 15,000 7,400 20%
1/07 Cloth. Mach B 6,000 3,000 20%
15/09 Replacement A 18,000 10.0%
1/05 Cloth. Mach C 7,000 10.0%
1/05 Cloth. Mach D 12,500 20%
1/05 Carpets 5,700 40%
1/05 Computer 9,500 40%

Remember - Assets bought in the current year use 200%/effective life.

Low-value pool
1/05 Desk 900
1/05 Couch 820
1,720 18.75%
We use 18.75% because these assets were acquired during the year.

Shown in the Schedule B as follows

SCHEDULE B
NON-SBE TAXPAYERS - POOLED ASSETS SCHEDULE

LOW-COST ASSETS Rate Decline in Value Closing value

Desk 900
Couch 820
TOTAL LOW-COST
ASSETS 1,720 18.75% 323 1,397
SECOND ELEMENT
COSTS OF EXISTING
ASSETS

TOTAL 2ND ELEMENT

COSTS 0 18.75% 0 0
ADD: CLOSING POOL
BALANCE FOR
PREVIOUS YEAR 0 37.50% 0 0
LOW-VALUE ASSETS VALUE

TOTAL LOW-VALUE
ASSETS 0 37.50% 0 0
TOTAL OF ALL POOL
CLOSING BALANCES 1,397
TERMINATION
VALUES (SALE
DISPOSALS PRICES)

TOTAL TERMINATION
VALUES 0 0
CLOSING POOL
BALANCE 1,397
TOTAL DECLINE IN
VALUE 323

Question 3 - Ben Quickly

NOTE: 1. A 30% depreciation rate was applied to assets acquired in prior years as stated in
2. For the current year, the effective life for the truck was given (10 years).
 EXISTING ASSETS AND NEW ASSETS

ITEM CP OAV RATE

YEAR 1
31/3 Van 1 24,000 30%

YEAR 2
28/3 Van 1 24,000 22,185 30%
28/3 Van 2 14,000 30%

YEAR 3
1/7 Van 2 14,000 12,907 30%
1/7 Van 3 7,500 20%
31/8 Truck 15,000 20%
(i.e. 200%/10 years)

Question 4 - Nathan Trendy

NOTE: The assets which have been sold during the year have been split into those assets
entire year and those which were sold.

The rates for truck 1 and 2 are shown as 28.57% diminishing value, though in the fo
there is no decimal point limitation - i.e. it is 200%/effective life
EXISTING ASSETS AND NEW ASSETS

ITEM CP OAV RATE

1/07 Manuf. Plant 17,600 5,200 25%

31/08 4,400 2,800 25%
22,000 8,000

1/07 Leaf Machines 6,000 5,518 25%

31/01 4,000 3,646 25%
10,000 9,164

1/02 Truck 14,000 12,597 30%

30/09 New Plant 5,500 20%
1/02 Truck 1 8,000 28.57%
1/02 Truck 2 8,000 28.57%
(200%/7 years)

Question 5 - Joe Sun

EXISTING ASSETS AND NEW ASSETS
 PY ITEM CP OAV RATE
1/03 Ovens 24,000 PC 6.67%
1/03 Slicer A 500 PC 10%
1/03 Wrapper A 800 PC 10%
1/03 Shop Fittings 2,500 PC 6.67%
1/03 Computer 3,126 PC 20%
1/03 Building 100,000 PC 4%
7/03 Wrapper B 1,000 PC 10%
15/05 Slicer B 300 PC 10%

CY ITEM CP OAV RATE

1/07 Ovens 24,000 23,465 PC 6.67%
1/07 Slicer A 500 483 PC 10%
1/07 Shop Fittings 2,500 2,444 PC 6.67%
1/07 Computer 3,126 2,917 PC 20%
1/07 Building 100,000 PC 4%
1/07 Wrapper B 1,000 968 PC 10%
1/07 Slicer B 300 296 PC 10%

Assets below - use date of installation not date of purchase

28/2 New Ovens 12,000 13.33%
28/2 Wrappers C 2,000 20%
28/2 Slicer D 1,500 20%
1/03 Extensions 80,000 4.0%
s.43-150 eligible industrial activities

Low-value pool - See Schedule Below

Slicer C 750 18.75%

Existing assets which have fallen below $1,000 cannot be pooled as they were depreciated using Prime C

s.25-25 Borrowing Expenses

Mortgage Fees 2,400
Procuration Fees 1,260
3,660 /1,825 = 2.00
s.40-880 Advice on building contract - not allowable capital but may be written off over 5 year

SCHEDULE B
NON-SBE TAXPAYERS - POOLED ASSETS SCHEDULE

LOW-COST ASSETS Rate Decline in Value Closing value

Slicer C 750
TOTAL LOW-COST
ASSETS 750 18.75% 141 609
SECOND ELEMENT
COSTS OF EXISTING
ASSETS

TOTAL 2ND ELEMENT

COSTS 0 18.75% 0 0
ADD: CLOSING POOL
BALANCE FOR
PREVIOUS YEAR 0 37.50% 0 0
LOW-VALUE ASSETS VALUE

TOTAL LOW-VALUE
ASSETS 0 37.50% 0 0
TOTAL OF ALL POOL
CLOSING BALANCES 609
TERMINATION
VALUES (SALE
DISPOSALS PRICES)

TOTAL TERMINATION
VALUES 0 0
CLOSING POOL
BALANCE 609
TOTAL DECLINE IN
VALUE 141

Question 6
(a) SBE taxpayer
Assets less than $30,000
General SBE pool
A 1,500 985
C 20,000 18,800
19,785 100%

SBE TAXPYERS
ASSETS < $30,000 COST Decline in value
Asset B 760
Opening pool balance 19785

TOTAL 20545 100% 20545 0

GENERAL POOL

ASSETS COST RATE Decline in Value Closing value

ADD: OPENING POOL

BALANCE CURRENT
YEAR - PREVIOUSLY
OWNED ASSETS NOW
PUT INTO POOL 30% 0 0
ASSETS ACQUIRED
DURING YEAR
TOTAL GENERAL
ASSETS 0 15% 0 0
TOTAL CL0SING
VALUES 0 0
TERMINATION
VALUES (SALE
DISPOSALS PRICES)

TOTAL TERMINATION
VALUES 0
CLOSING POOL
BALANCE 0

Total decline in value 20,545

(b) Use Low-value pool
A (low-value pool) 1,500 985 37.50%
B (low-cost pool) 760 760 18.75%
See Schedule Below 1,745
Non-pool deduction
See Schedule Below C 20,000 18,800 13.33%

SCHEDULE B
NON-SBE TAXPAYERS - POOLED ASSETS SCHEDULE

LOW-COST ASSETS Rate Decline in Value Closing value

Asset B 760
 TOTAL LOW-COST
ASSETS 760 18.75% 143 617
SECOND ELEMENT
COSTS OF EXISTING
ASSETS
TOTAL 2ND ELEMENT
COSTS 0 18.75% 0 0
ADD: CLOSING POOL
BALANCE FOR
PREVIOUS YEAR 0 37.50% 0 0
LOW-VALUE ASSETS VALUE
Asset A 985
TOTAL LOW-VALUE
ASSETS 985 37.50% 369 616
TOTAL OF ALL POOL
CLOSING BALANCES 1233
TERMINATION
VALUES (SALE
DISPOSALS PRICES)
TOTAL TERMINATION
VALUES 0 0
CLOSING POOL
BALANCE 1233
TOTAL DECLINE IN
VALUE 512

Schedule A
EXISTING ASSETS AND NEW ASSETS

ITEM CP OAV RATE DAYS

C 20,000 18,800 13.33%

(c) Don't use Low-value pool

EXISTING ASSETS AND NEW ASSETS

ITEM CP OAV RATE DAYS

A 1,500 985 25.00%
B 760 760 40.00% 242
C 20,000 18,800 13.33%

Question 7 Brett

Low-value pool
Existing pool assets 3,900 37.50%
 New asset - G 975 975 18.75%
4,875
Less: disposal proceeds

Non-pool assets

EXISTING ASSETS AND NEW ASSETS

ITEM CP OAV RATE DAYS

A 10,000 7,600 40.00% 342
B 9,000 5,250 16.67%
C 1,500 820 66.67%
D 28000 12,800 7.41%
E 15,000 15,000 16.67% 264
F 6,400 6,400 6.67% 198

Use 200% over

effective life

SCHEDULE B
NON-SBE TAXPAYERS - POOLED ASSETS SCHEDULE
LOW-COST ASSETS

Asset G Rate Decline in Value Closing value

975
TOTAL LOW-COST
ASSETS 975 18.75% 183 792
SECOND ELEMENT
COSTS OF EXISTING
ASSETS

TOTAL 2ND ELEMENT

COSTS
ADD: CLOSING POOL
BALANCE FOR
PREVIOUS YEAR 0 18.75% 0 0
LOW-VALUE ASSETS 3,900 37.50% 1,463 2,437
VALUE

TOTAL LOW-VALUE
ASSETS
TOTAL OF ALL POOL
CLOSING BALANCES 0 37.50% 0 0
DISPOSALS 3,229
 TERMINATION
VALUES (SALE
Assets PRICES)
970
TOTAL TERMINATION
VALUES
CLOSING POOL
BALANCE 970 970
TOTAL DECLINE IN
VALUE 1,646 2,259

Question 8 - Claire
Sales - as a trading business, use accruals method 170,000 - 20,000 + 28,500
Interest
Assessable Income

Less Allowable Deductions

Accounting fees
Depreciation - low-value pool
Depreciation - SBE pool
Food
Wages
Stamp duty on van - capital expense
Borrowing expense - stamp duty and legal fees
670/1,095 = 0.61 x 273
Note - the lease preparation expenses were incurred
last year and would have been deducted last year.
Many students will confuse them with borrowing expenses.
Fuel
Insurance
Taxable income

Tax on Taxable Income

Plus - Medicare Levy

Less: LMITO 255 + 7.5% X (46,964 - 37,000)

Less - LITO
Less - Small business tax offset
Net tax payable

Low-value Pool - this will continue to be depreciated as a low-value pool

Existing assets 12,800 x 37.5% = 4,800
Food heating unit 930 x 37.5% = 349
Sale of small fridge
Closing value of low-value pool 5,149

SBE pool
Assets which cost less than $30,000
New printer 990
New stove 15,650
New computer 6,720
23,360 100% 23,360

Small business tax offset

Step 1 - work out the proportion
Net business income 45,084 96%
Taxable income 46,964

Step 2 - Calculate tax payable on SB net income

6,810.30 x 96% 6,538
Step 3 - Calculate the offset
8.00% x 6,538 523

Opening pool balance - put in closing value of non-pooled assets

Opening balance 18,100 30% 5,430
New asset - van 33,000 15% 4,950

Assets sold
Stove - 6,000
Computer - 1,500
- 7,500
Closing pool balance
Total pool depreciation 33,740

Question 9 - Division 43

Holiday house - as it is not used for income-earning purposes there is no deduction available.
Residential rental - income-earning property.
250,000 x 2.5% x 273/365 = 4,675

Residential rental property

120,000 x 2.5% x 228/365 1,874

Factory
470,000 x 4.0% 117/365 6,026

Factory
890,000 x 2.5% x 92/365 5,608

Office building
350,000 x 2.5% x 16/365 384

Office building
300,000 x 4.0% x 16/365 526
ere. Make sure

D NEW ASSETS DISPOSALS

Decline in
DAYS Value CAV AV (at sale) SP B/A

284 389 1,611

403 1,208

302 906 2,350 1,444

1 6 4,314
200%/4 years) 308 1,444

D NEW ASSETS DISPOSALS

Decline in
DAYS Value CAV AV (at sale) SP B/A
275 75 925 925 0
275 452 1,048 1,048 0
77 312 7,088 8,000 912
PC 1,200 1,800
289 1,425 16,575
46 88 6,912 6,600 (312)
61 418 12,082
61 381 5,319
61 635 8,865
4,986 600

323 1,397
 5,309 600

d in prior years as stated in the question.

given (10 years).
D NEW ASSETS DISPOSALS
Decline in
DAYS Value CAV AV (at sale) SP B/A

92 1,815 22,185

271 4,941 17,244 25,000 7,756

95 1,093 12,907
6,034 7,756

1 11 12,896 12,000 -896

62 255 7,245 6,000 -1,245
304 2,499 12,501
200%/10 years) 2,765 -2,141

een split into those assets which have been held for the

hing value, though in the formula under s.40-70

D NEW ASSETS DISPOSALS

Decline in
DAYS Value CAV AV (at sale) SP B/A

1,300 3,900
62 119 2,681 3,500 819

1,380 4,138
215 537 3,109 5,000 1,891

216 2,236 10,361 9,000 (1,361)

274 826 4,674
150 939 7,061
150 939 7,061
0%/7 years) 8,276 1,349

D NEW ASSETS DISPOSALS

 Decline in
DAYS Value CAV AV (at sale) SP B/A
122 535 23,465
122 17 483
7 2 798 500 (298)
122 56 2,444
122 209 2,917
122 1,337
116 32 968
47 4 296
2,192 (298)

Decline in
DAYS Value CAV AV (at sale) SP B/A
1,601 21,864
50 433
167 2,277
625 2,292
4,000
100 868
30 266

123 539 11,461

123 135 1,865
123 101 1,399
122 1,070 78,930
8,418

141 609

depreciated using Prime Cost. (s.40-425(5) and (6))

x334 = 668
y be written off over 5 years $840/5 = $168

760

19,785 0
20,545
note as opening pool balance is less than $30,000 and no new
plant with a value greater than $30,000 has been added to the
pool it is written off

369
143
512 1,233

2,506 16,294
3,018
ASSETS DISPOSALS
Decline in
Value CAV SP B/A
2,506 16,294
2,506

ASSETS DISPOSALS
Decline in
Value CAV SP B/A
246 739
202 558
2,506 16,294
2,954

Decline in Closing
value value
1,463
This setting out has been
used to save space. In an
exam students will be
required to use the schedule.
 This setting out has been
183 used to save space. In an
1,646 3,229 exam students will be
970 required to use the schedule.
2,259

ASSETS DISPOSALS
Decline in
Value CAV AV (at sale) SP B/A
2848 4,752 8,000 3,248
875 4,375
547 273
948 11,852
1,809 13,191
232 6,168
7,259 3,248
,000 - 20,000 + 28,500 178,500 *
2,780
181,280

900
5,149 *
33,740 *
60,000 *
30,000 *

167 *

2,860 *
1,500 * 134,316
46,964

6,810.30
939.28
7,749.58
1002.3
295.54
523.01 1,820.85
5,928.73

8,000
581
 840
7,741

need to bring in Schedule A OAV as now

12,670 SBE
but as we have new assets we can't write
28,050 off the pool balance even through it is
40,720 less than $30,000

(7,500)
33,220

ion available.