Test 3
The asset is not part of a set of assets that you start to hold during the income year that costs more than $300.
Whether items form a set needs to be determined on a case by case basis. Items may be regarded as a set if they are:
- interdependent on each other
- marketed as a set, or
- designed and intended to be used together.
Example: Set of items - ignoring any GST impact
Brenna, a sales manager, hears about a series of six progressive learning CDs. The CDs are designed to develop selling skills in stages. You move through to the next CD only when you are familiar with the lessons on the previous CD. The CDs are marketed as a set and are designed to be used together. The six CDs would be regarded as a set. The six CDs cost $360. However Brenna finds out that she is able to purchase the CDs individually for $60 each. Brenna buys one CD each week for six weeks in the same income year at a total cost of $360. Although the cost of each CD is less than $300, Brenna cannot claim an immediate deduction for the CDs because they are a set and the cost of the set is more than $300.
A group of assets acquired in an income year can be a set in themselves, even though they also form part of a larger set acquired over more than one income year. If the assets acquired in an income year are a set, the total cost of that set must not exceed $300. If the assets acquired in an income year are not a set, the test does not need to be satisfied. Assets acquired in another income year are not taken into account when working out whether items form a set or the total cost of a set.
Example: Set of items part of a larger set - ignoring any GST Impact
Paula, a primary school teacher, hears about a series of twelve progressive reading books. The books are designed to develop children's reading skills in stages. Pupils move on to the next book only when they have successfully completed the previous book. The first six books are at a basic level while the second six are at an advanced level.
Paula buys one book a month beginning in January and by 30 June she holds the first six books (the basic readers) at a total cost of $240. Because of the interdependency of the books, these six books are a set even though they can be purchased individually and form part of a larger set. An immediate deduction is available for each book because the cost of the set Paula acquired during the income year was not more than $300.
If Paula acquires the other six books (the advanced readers) in the following income year, they would be regarded as a set acquired in that year.
Example: Not a set - ignoring any GST Impact
Mary, an employee, buys a range of tools for her tool kit for work - a shifting spanner, a boxed set of screwdrivers and a hammer. Each item costs $300 or less. While these tools may comprise or add to Mary's tool kit, they are not a set. It would make no difference if Mary purchased the items at the same time and from the same supplier or manufacturer. An immediate deduction is available for all the items, including the screwdrivers. The screwdrivers are a set, as they are marketed and used as a set. However, as the cost is $300 or less the deduction is available.
The concept of a set requires more than one depreciating asset. In some cases, however, more than one item may be a single depreciating asset. An example would be a three-volume dictionary. This is a single depreciating asset, not a set of three separate depreciating assets.
Example: Set of items - ignoring any GST impact
Shelley, an editor, spends $400 on a dictionary published in three volumes - A to G, H to O and P to Z - as part of her reference library. The dictionary is a single edition, the three volumes having a single integrated function. The books are one depreciating asset and the set test does not apply. However, an immediate deduction would not be available because the asset costs more than $300.
Sections within The tests
Last Modified: Wednesday, 17 April 2013