Commentary

B2.479 Wasting assets

Business tax
Business tax | Commentary

B2.479 Wasting assets

Business tax | Commentary

B2.479 Wasting assets

A wasting asset is one which has a predicted life of 50 years or less1. The mere fact that an asset is a wasting asset does not enable the expenditure incurred on its acquisition to be deducted, or for any notional amount representing its falling value over the years to be deducted.

In Coltness Iron Co2, the company claimed to deduct a sum on every ton of iron and coal it sold to compensate the company for the exhaustion of the expenditure which it had incurred in the sinking of pits. The cost of making bores and sinking pits was charged to a sunk capital account and was written off annually by the sum computed on the quantities of iron made and the coal sold in the year. It was held that such a sum was not deductible as it was a portion of the outlay of capital.

Similarly, in Alianza Co Ltd3, the company owned nitrate grounds in Chile which, with the factory, machinery and plant, would become useless when the nitrate was exhausted. It set aside a sum each year to meet the

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