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Lana1417(Initiate)Initiate
22 Feb 2021

Could anyone help me with this scenario, please?:

A Sole Trader buys a car in February 2021 with a price of $40,000. Then he starts a logbook for 12 continuous weeks. The logbook shows, just saying, 90% business use.

Temporary Full Expensing applies to the business portion of the car which is $36,000 for 2020/21 Tax Return. So, the written down value is 0.

In 2021/22 year, he changes the business portion to 60% (with a new logbook)

The end of 2021/22 he sells the car for, just saying, $30,000.

What percentage (90% or 60%) or what method do we use to calculate balancing adjustment amount of the car to include in Assessable Income for 2021/2022 Tax Return?

Any thoughts are much appreciated! ?

3,370 views
2 replies
3,370 views
2 replies

Most helpful response

Most helpful replyATO Certified Response

KylieATO(Community Support)Community Support
ATO Certified Response26 Feb 2021

Hi @Lana1417,

The balancing adjustment amount is the difference between the termination value and the adjustable value of a depreciating asset (cost less decline in value) at the time of a balancing adjustment event.

If an assets termination value is greater than its adjustable value, the difference is generally an assessable balancing adjustment amount. If the termination value is less than the adjustable value, the difference is generally a deductible balancing adjustment amount. Therefore, in the scenario provided, the difference between the termination value and adjustable value will result in a balance adjustment event.

Balancing adjustments

All replies

Most helpful replyATO Certified Response

KylieATO(Community Support)Community Support
ATO Certified Response26 Feb 2021

Hi @Lana1417,

The balancing adjustment amount is the difference between the termination value and the adjustable value of a depreciating asset (cost less decline in value) at the time of a balancing adjustment event.

If an assets termination value is greater than its adjustable value, the difference is generally an assessable balancing adjustment amount. If the termination value is less than the adjustable value, the difference is generally a deductible balancing adjustment amount. Therefore, in the scenario provided, the difference between the termination value and adjustable value will result in a balance adjustment event.

Balancing adjustments

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Balancing Adjustment Amount Calculation | ATO Community