Calculating tax deductionsIn Australia the financial year is 1st July to 30th June.Depreciation of certain items are tax deductible, eg job related computers, investment properties etc.If an item is purchased during the year it can only be depreciated for the portion of the financial year that you own it.For example a printer buys a printing press on 1st October, they can only claim 9/12 of the allowable deduction this year.

Example 1Lara purchases a laptop on 31/1/05 for $2100. She uses the declining balance method and a rate of 30% to depreciate her computer.a) How much depreciation can Lara claim in the 04/05 financial year?b) How much depreciation can Lara claim in the 05/06 financial year?

a) If purchased on 31/1/05 Lara can claim 5/12 of the year.Depreciation during 04/05

5/12 × 2100 × 0·3 = $262·50

b) Value at the beginning of 05/06 is:2100 262·50 =

Depreciation during 05/06 1837·50 × 0·3 =

$1837·50

$551·25

Today’s workExercise 9E

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