Exclusions
There are types of depreciating assets the simplified depreciation rules do not apply to. However, these assets may be deductible under other parts of the income tax law.
Assets you rent or lease to others
You cannot claim a deduction for assets you lease out, or will lease out, for more than half the time on a depreciating asset lease under the simplified depreciation rules. You may generally deduct these under the uniform capital allowance (UCA) rules. The UCA rules are the general depreciation rules.
You generally cannot claim a deduction for depreciating assets used in rental properties under the simplified depreciation rules because they are part of property that is subject to a depreciating asset lease.
However, you can claim a deduction for assets you lease out under a hire purchase agreement, or short-term hire agreement.
Assets allocated to a low-value pool
Where you allocated assets to a low-value pool before using the simplified depreciation rules, those assets stay in the low-value pool and you continue to claim deductions under the UCA rules.
Horticultural plants
You cannot claim a deduction for horticultural plants (including grapevines) under the simplified depreciation rules, but you may deduct them under the UCA rules.
Software
Under the UCA rules, you can continue to deduct expenditure that you incurred in developing software that you allocated to a software development pool before you started to use these rules. You cannot claim any other deduction for this type of expenditure under the simplified depreciation rules or UCA rules.
Capital works
You cannot claim deductions for most buildings and structural improvements under either the simplified depreciation rules or the UCA, but you can generally claim them under the capital works rules in Division 43 (section 43-10 - section 43-260) of the ITAA 1997.
However, you can deduct some buildings and structural improvements, such as improvements for conserving and conveying water, under the UCA rules. If you are using the simplified depreciation rules, you can choose to deduct these assets under either these rules or UCA rules.
Investments in Australian films
The simplified depreciation rules do not apply to investments in Australian films. The law about claiming deductions for investments in Australian films has changed for 2009-10 and later income years. As a consequence of the Australian Screen Production Incentive, Division 10B and Division 10BA of the ITAA 1936 have been repealed with effect from 1 July 2010.
Research and development
You cannot claim deductions using these simplified depreciation rules for assets that were previously deductible under the research and development provisions under the ITAA 1936.
Sections within Simplified depreciation rules
Last Modified: Tuesday, 3 July 2012