Show download pdf controls
  • Capital works deductions

    Capital works used to produce income, including buildings and structural improvements, are written off over a longer period than other depreciating assets.

    Note that the land itself can't be written off and its cost isn't deductible.

    The capital works deduction is available for:

    • buildings or extensions, alterations or improvements to a building
    • alterations and improvements to a leased building, including shop fitouts and leasehold improvements
    • structural improvements such as sealed driveways, fences and retaining walls
    • earthworks for environmental protection, such as embankments.

    If it isn't possible to determine the actual construction costs, you can get an estimate from a quantity surveyor or other independent qualified person. You can claim a deduction for the full cost of the estimate in the year it is incurred. Deduction rates of 2.5% or 4.0% apply, depending on the date on which construction began, the type of capital works, and how they're used.

    Special rules apply to:

    You can work out the correct Capital Works deduction that applies to you by using the Depreciation and Capital Allowances Tool. To work out your capital works amounts you can click on the ‘Rental Property’ tab and add relevant assets, or click on the 'Asset' tab and chose 'Net income or loss from business' under the 'Type' question.

    See also:

    Last modified: 18 Sep 2019QC 45988