# Decline in Value Deduction - FY2025-26

## (a) Prime Cost Method

**Calculation:**
- Cost × (1 / effective life)
- $30,000 × (1 / 5)
- $30,000 × 0.20
- **$6,000**

## (b) Diminishing Value Method

**Calculation:**
- Cost × (2 / effective life)
- $30,000 × (2 / 5)
- $30,000 × 0.40
- **$12,000**

## Controlling Authority

The decline in value (capital allowance) rules are controlled by the **Income Tax Assessment Act 1997 (Cth)**, specifically Division 40 (Capital Allowances).