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Last updated 1 April 2015

We use the following common terms in Table 3, Table 4, Table 5 and Table 6 to describe how or whether items are attached to premises:

Fixed items are annexed or attached by any means, for example screws, nails, bolts, glue, adhesive, grout or cement, but not merely for temporary stability.

Freestanding items are designed to be portable or movable. Any attachment to the premises is only for the item’s temporary stability.

Other than freestanding items are fixed to the premises that are not designed to be portable or movable. The test is not whether the item is removable, even if the attachment is slight, but whether the inherent design and function of the item is such that it is intended to remain in place for a substantial period of time.


The ordinary meaning of plant does not include the setting for income-earning activities. Residential rental properties will invariably be the setting for income-producing activities and so do not fall within the ordinary meaning of plant. Items that form part of the premises are also part of the setting, and therefore not eligible for deductions for their decline in value.

You should consider the following factors when determining whether an item is part of the premises or setting:

  • whether the item appears visually to retain a separate identity
  • the degree of permanence with which it is attached to the premises
  • the incompleteness of the structure without it
  • the extent to which it was intended to be permanent or whether it was likely to be replaced within a relatively short period.

None of these factors alone is determinative and they must all be considered together.


Wall and floor tiles are generally fixed to the premises, not freestanding, and intended to remain in place for a substantial period of time. They will generally form part of the premises. Expenditure on these items falls under capital works.

On the other hand, a freestanding item such as a bookcase may be attached to the structure only for temporary stability. It therefore does not form part of the premises and may qualify for a deduction for decline in value.

Kitchens are fixed to the premises, are intended to remain in place indefinitely and are necessary to complete the premises. Any separate visual identity they have is outweighed by the other factors. They are therefore part of the premises. Clothes hoists are also part of the premises for similar reasons.

Insulation batts, although generally not fixed, are intended to remain in place indefinitely, do not have a separate visual identity and add to the completeness of the structure. They are also part of the premises.

In addition to its ordinary meaning, plant includes articles and machinery.


Plant includes items that are articles within the ordinary meaning of that word. A curtain, a desk and a bookcase would all be considered articles. A structure attached to land, such as a clothes hoist or pergola, would not be considered an article.

If an item forms part of the premises according to the descriptions above, it is not an article. Therefore, items such as false ceiling panels and insulation batts are not articles while they are in place. However, a painting hung on a wall retains its character as an article.


Plant also includes items that are machinery, whether or not they form part of the premises. In deciding whether something is machinery you must:

  • identify the relevant unit or units based on functionality
  • decide whether that unit comes within the ordinary meaning of machinery.

Identify the unit

Taxation Ruling TR 94/11 – Income tax: general investment allowance – what is a unit of property? provides guidelines to help you identify what is a unit. You need to consider whether a particular item is a unit, part of a larger unit, or whether its components are separate units. A unit will generally be an entity entire in itself; something that has an identifiable, separate function. However, it need not be self-contained or used in isolation and it may vary the performance of another unit. An item is not a unit simply because it is described as a system.

An item may be made up of several components. To determine what the relevant unit is, you need to consider the function of each component and of the larger composite item. A door handle, for example, is part of the door and not a separate unit. Similarly, a freestanding spa pool that is made up of the shell, skirt, heater, pump, filter and piping is one unit.

In other cases separate units may work in conjunction with each other to achieve a common objective. For example, a fire safety system may consist of several components including, for example, an indicator board, hydrants, piping, alarms, smoke detectors and sprinklers. All these components function together to form the system. However, each component also performs its own discrete function independent of the others. In this example, each component is a separate unit.

Is the unit machinery?

Once you have identified a unit you must decide if it is machinery. The ordinary meanings of machinery and machine do not include anything that is only a reservoir or conduit, even if it is connected to something which is without doubt a machine. Devices that use minute amounts of energy in the form of electrical impulses in various processes, such as microprocessors and computers, come within the ordinary meaning of machine. Appliances for heating, such as stoves, cook tops, ovens and hot-water systems, are also included.

The components of a system that are separate units and also machinery will be plant, but any ducting, piping or wiring that may be connected to the machine or machines is generally not machinery. However, where the cost of wiring is negligible, such as in small domestic-size systems, the cost may be included in the cost of installation rather than being treated separately. The cost of wiring to connect a typical home security system, for example, may be treated as negligible.

Which effective life can you use?

For each of your depreciating assets, you may choose to use:

  • the effective life the Commissioner has determined for such assets, or
  • your own reasonable estimate of its effective life.

Generally, you may only use the Commissioner’s determination that applied at the time you acquired, or entered into a contract to acquire, your depreciating asset.

Table 3, Table 4, Table 5 and Table 6 include the effective life that the Commissioner has determined for a number of depreciating assets. For more information about claiming deductions for assets in the Capital works deduction column of Tables 3, 4, 5 and 6, see Capital works deductions.

If the Commissioner has not determined the effective life of a depreciating asset at the time you acquired it, or entered into a contract to acquire it, you may make your own reasonable estimate of its effective life, using the information below. See also the Guide to depreciating assets 2014.

Working out the effective life yourself

Generally, the effective life of a depreciating asset is how long it can be used by any entity for a taxable purpose, or for the purpose of producing exempt income or non-assessable non-exempt income:

  • having regard to the wear and tear you reasonably expect from your expected circumstances of use
  • assuming that it will be maintained in reasonably good order and condition, and
  • having regard to the period within which it is likely to be scrapped, sold for no more than scrap value or abandoned.

Effective life is expressed in years, including fractions of years. It is not rounded to the nearest whole year.

The sort of information you could use to make an estimate of effective life of an asset includes:

  • the physical life of the asset
  • engineering information
  • the manufacturer’s specifications
  • your own experience with similar assets
  • the experience of other users of similar assets
  • the level of repairs and maintenance commonly adopted by users of the asset
  • retention periods
  • scrapping or abandonment practices.

You work out the effective life of a depreciating asset from the asset’s start time, not from the time you first start claiming deductions.

Can I change an effective life I am using if the Commissioner has determined a new effective life?

No. You can choose to recalculate a depreciating asset’s effective life only if the effective life you have been using is no longer accurate because of changed circumstances relating to the nature of the asset’s use. A new determination of effective life by the Commissioner does not in itself change the nature of an asset’s use and does not allow you to recalculate an asset’s effective life.