Section EE 50 — Income Tax Act 2007: Amount of depreciation loss when item partly used to produce income

EE 50 Amount of depreciation loss when item partly used to produce income When subsection (2) applies (1) Subsection (2) applies when— (a) a person has an amount of depreciation loss for an item of depreciable property for an income year, other than an amount arising under section EE 48(2) ; and (b) at a time during the income year, the item is partly used, or partly available for use, by the person— (i) in deriving assessable income or carrying on a business for the purpose of deriving assessable income; or (ii) in a way that is subject to fringe benefit tax; and (c) at the same time, the item is partly used, or is partly available for use, by the person for a use that falls outside both paragraph (b)(i) and (ii); and (d) the item is not a motor vehicle to which subpart DE (Motor vehicle expenditure) applies. Partial use: formula (2) The deduction the person is allowed for the amount of depreciation loss must not be more than the amount calculated using the formula— depreciation loss × qualifying use days all days. Definition of items in formula (3) In the formula in subsection (2),— (a) depreciation loss is the amount of depreciation loss for the income year: (b) qualifying use days is the number of days in the income year on which the person owns the item and uses it, or has it available for use, for a use that falls within subsection (1)(b)(i) or (ii): (c) all days is the number of days in the income year on which the person owns the item and uses it or has it available for use. Other units of measurement (4) A unit of measurement other than days, whether relating to time, distance, or anything else, is to be used in the formula if it achieves a more appropriate apportionment. When subsection (6) applies (5) Subsection (6) applies when— (a) a person has an amount of depreciation loss for an item of depreciable property arising under section EE 48(2) ; and (b) the item was, at any time during the period the person owned it, dealt with in— (i) subsection (2); or (ii) any applicable paragraph in section EZ 11 (Amounts of depreciation recovery income and depreciation loss for part business use up to 2004–05 income year); and (c) the item is not a motor vehicle to which subpart DE applies. Deduction for depreciation loss: formula (6) The deduction the person is allowed for the amount of depreciation loss is calculated using the formula— disposal depreciation loss × all deductions (base value − adjusted tax value at date). Definition of items in formula (7) In the formula in subsection (6),— (a) disposal depreciation loss is the amount resulting from a calculation made for the item under section EE 48(2) : (b) all deductions is all amounts of depreciation loss relating to the item for which the person has been allowed a deduction in each of the income years in which the person has owned the item: (c) base value has whichever is applicable of the meanings in sections EE 57 to EE 59 : (d) adjusted tax value at date is the item’s adjusted tax value on the date on which the disposal or event occurs. When subsection (9) applies (8) Subsection (9) applies when— (a) a person has an amount of depreciation loss for an item of depreciable property for an income year arising under section EE 48(2) ; and (b) in the income year in which the amount of depreciation loss arises, the person starts to use the item, or have it available for use, for the purpose of deriving assessable income or carrying on a business for the purpose of deriving assessable income; and (c) at a time during the income year, the item is partly used, or partly available for use, by the person— (i) in deriving assessable income or carrying on a business for the purpose of deriving assessable income; or (ii) in a way that is subject to fringe benefit tax; and (d) the item is not a motor vehicle to which subpart DE (Motor vehicle expenditure) applies. Partial use: formula (9) The deduction the person is allowed for the amount of depreciation loss is calculated using the formula— disposal depreciation loss × qualifying use days all days. Definition of items in formula (10) In the formula in subsection (9),— (a) disposal depreciation loss is the amount resulting from a calculation made for the item under section EE 48(2) : (b) qualifying use days is the number of days in the income year on which the person owns the item and uses it, or has it available for use, for a use that falls within subsection (8)(c)(i) or (ii): (c) all days is the number of days in the income year on which the person owns the item and uses it or has it available for use for any purpose. Other units of measurement (11) A unit of measurement other than days, whether relating to time, distance, or anything else, is to be used in the formula if it achieves a more appropriate apportionment. Defined in this Act: adjusted tax value , amount , assessable income , business , deduction , depreciable property , depreciation loss , fringe benefit tax , income year , motor vehicle , property , Compare: 2004 No 35 s FB 7