Hi Cutty, depreciation claimed under division 40 (different to building depreciation) does not reduce the cost base for CGT purposes (this is a bit of a misconception arising from the fact that in most on the sale of properties it essentially has the same effect, but from a technical perspective it is not tge case). You may also be getting this confused with holding costs (such as rates and interest), which normally get added to the costbase of a CGT asset unless they are deductible.
Normally a capital gain on a depreciating asset is disregarded under section 118-20 (the exception being for CGT Event K7) as division 40 deals with any gain or loss.
However K7 is excluded as the policy intent behind K7 is to bring to account the capital gain relating to the private use portion of the asset only. With the taxable use portion still dealt with under division 40.
In the ATO example it uses the term decline in value however only 90% of the decline in value is claimable as a deduction, being the $1,800 and not the full $2,000.
As stated my formulas do not follow the exact formulas in the legislation, but they arrive at the same result. As in section 40-290 there is a reduction in the assessable/deductible balancing amount based on the non taxable use.
My examples were used to show the logic behind the outcome of the balancing adjustment and the capital gain.
On a side note, considering you raised it, capital gains on cars (with the term car defined in tax legislation) are disregarded, however a truck does not faill into this exemption.
Once again this is all just advice general in nature and not intended to take into acvount your specific circumstances, which you should talk to your accountant about.
