The Income Tax Act (ITA) outlines the rules and permissions related to depreciation in Part D and Part E. Here's a breakdown of key sections:
Section DA1: General Permission
Section DA1 of Part D permits deductions for amounts of expenditure or loss, including depreciation loss, when deriving income.
Part E: Timing and Quantifying Rules
Subpart EA: Rules for specific items like:
- Trading stock
- Livestock
- Excepted financial arrangements (EA1)
- Revenue account property (EA2)
- Prepayments (EA3)
Subsections of Interest
- Depreciation Loss: When a person has a depreciation loss for an item (Section EE1(2)).
- Depreciation Recovery Income: When a person recovers depreciation income for an item (Section EE1(3)).
- Depreciable Property: Defined under Section EE6 as property expected to decline in value while being used or available for income generation.
- Exclusions from Depreciable Property: Section EE7 lists items not considered depreciable property, such as land and trading stock.
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