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  • Water facilities



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

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    A water facility is plant or a structural improvement that is primarily or principally for the purpose of conserving or conveying water. The expenditure must be incurred primarily and principally for conserving or conveying water for use in a primary production business on land in Australia.

    You can claim a deduction for the decline in value of a water facility in equal instalments over 3 years.

    Items in relation to which deductions are available include dams, earth tanks, underground tanks, concrete or metal tanks, tank stands, bores, wells, irrigation channels or similar improvements, pipes, pumps, water towers, windmills and extensions or improvements to any of these items.

    If you are carrying on a primary production business on the land, you may claim the deduction even if you are only a lessee of the land.

    The deduction is reduced where the facility is not wholly used for either:

    • carrying on a primary production business on land in Australia or
    • a taxable purpose-for example, producing assessable income.

    Any recoupment of the expenditure would be assessable income. As the expenditure on water facilities is deductible over 3 income years, special rules apply to determine the amount of any recoupment to be included in assessable income in the year of recoupment and in later income years.

    These deductions are not available to a partnership. Costs incurred by a partnership for facilities to conserve or convey water are allocated to each partner who can then claim the relevant deduction in respect of their share of the expenditure.

    Last modified: 28 Oct 2003QC 27421