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Electricity connections and telephone lines

Last updated 7 April 2020

You may be able to claim a deduction over 10 years for capital expenditure you incur on:

  • connecting mains electricity to land on which a business is carried on for a taxable purpose or in upgrading an existing connection to that land, or
  • a telephone line on or extending to land on which a primary production business is carried on.

If the expenditure incurred arises from a non-arm's length dealing and is more than the market value of what it was for, the amount of the expenditure is taken to be that market value.

A recoupment of the expenditure may be included in your assessable income.

These deductions are not available to a partnership. Costs incurred by a partnership are allocated to each partner who can claim a deduction for their share of the relevant capital expenditure.

Such capital expenditure may be incurred on a depreciating asset. However, if the expenditure is deductible under these rules, you cannot use the general rules for working out decline in value or claim the immediate deduction for depreciating assets costing $300 or less.

If you incur the capital expenditure on a depreciating asset and you are a primary producer and an STS taxpayer, you can choose to work out your deductions for these depreciating assets using either the STS capital allowance rules or these UCA rules. For more information about STS taxpayers, see STS taxpayers.

There are no specific balancing adjustment rules for a depreciating asset on which capital expenditure has been incurred that is deductible under these rules. That asset may, however, be considered part of the land for capital gains tax purposes.