A depreciating asset is an asset that has a limited effective
life and can reasonably be expected to decline in value over
the time it is used. Depreciating assets include such items as
computers, electric tools, furniture and motor vehicles.
Land and items of trading stock are specifically excluded from
the definition of depreciating asset.
Most intangible assets are also excluded from the definition
of depreciating asset. Only the following intangible assets are
specifically included as depreciating assets:
■ in-house software
certain items of intellectual property (patents, registered
designs, copyrights and licences of these)
■ mining, quarrying or prospecting rights and information
■ certain indefeasible rights to use a telecommunications
cable system
■ certain telecommunications site access rights
■ spectrum licences, and
■ datacasting transmitter licences.
Improvements to land or fixtures on land – for example,
windmills and fences – may be depreciating assets and are
treated as separate from the land, regardless of whether they
can be removed or not.
In most cases, it will be clear whether or not something
is a depreciating asset. If you are not sure, contact your
recognised tax adviser or the Tax Office.