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  • Immediate deduction for certain depreciating assets costing $300 or less

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    The immediate deduction for plant costing $300 or less was removed from 1 July 2000 except for some plant used predominantly to produce non-business income and for small business taxpayers who could continue to claim the deduction until the start of the STS on 1 July 2001.

    Under the UCA rules, the decline in value of certain depreciating assets costing $300 or less (after GST credits or adjustments) is their cost. This means you get an immediate deduction for the cost of the asset to the extent that you use it for a taxable purpose during the income year in which the deduction is available.

    The immediate deduction is available when you start to hold a depreciating asset in an income year and the asset costs $300 or less and:

    • is used predominantly for the purpose of producing assessable income that is not derived from carrying on a business
    • is not part of a set of assets you start to hold in that year that costs more than $300
    • is not one of a number of identical or substantially identical assets acquired in the same year that together cost more than $300.

    Example: Depreciating asset used in carrying on a business

    Rob buys a spanner for $50. The spanner is used 100 per cent in Rob's mechanics business. As the spanner is used for producing assessable income from carrying on a business, Rob cannot claim an immediate deduction for it under the UCA rules. He must work out the decline in value using the general rules for working out decline in value or allocate the asset to a low-value pool.

    End of example

     

    Example: Set of items

    Paula, a primary school teacher, is buying a series of story books costing $65 each. The books are labelled volumes 1 to 10 but she buys one volume every month during the school year. Although Paula only received five volumes before 30 June 2002, she cannot claim an immediate deduction for any of these books because they form part of a set with a total cost of more than $300.

    End of example

     

    Example
    Substantially identical items
    Jan buys 3 kitchen stools for her rental property. The stools, which are substantially identical, cost $150 each. Jan cannot claim an immediate deduction for the cost of each individual stool because they are substantially identical and their total cost exceeds $300.

    End of example

    Examples of depreciating assets which could be eligible for the immediate deduction are:

    • tools of trade acquired by an apprentice for their trade
    • a briefcase purchased by a salary and wage earner for their job
    • furniture purchased by a landlord for their rental property.

    The immediate deduction is not available for expenditure or depreciating assets deductible under the rules for:

    Last modified: 11 Dec 2019QC 27399