• Plants with an effective life of three or more years

    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

    Effective life

    Annual write-off rate

    Maximum write-off period

    3 to less than 5 years

    40%

    2 years and 183 days

    5 to less than 6 2/3 years

    27%

    3 years and 257 days

    6 2/3 to less than 10 years

    20%

    5 years

    10 to less than 13 years

    17%

    5 years and 323 days

    13 to less than 30 years

    13%

    7 years and 253 days

    30 years or more

    7%

    14 years and 105 days

    Where ownership of the horticultural plants changes, the new owner is entitled to continue claiming the balance of capital expenditure incurred on establishing the plants on the same basis.

    If you are a primary producer and an STS taxpayer, you must use the UCA rules to work out your deductions for horticultural plants. For more information about STS taxpayers, see STS taxpayers.

    You may need to include a recoupment of expenditure on horticultural plants in your assessable income. As the expenditure may be deductible over more than one income year, 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. An amount received for the sale of a horticultural plant for its market value is not regarded as an assessable recoupment.

    Grapevines

    Note

    The specific rules for working out the decline in value of grapevines only apply to grapevines that are planted and first used by you in a primary production business before 1 October 2004. If a grapevine is planted and first used by you in a primary production business on or after 1 October 2004, the decline in value of the grapevine is worked out under the provisions relating to horticultural plants - see Horticultural plants.

    The decline in value of a grapevine is worked out at a rate of 25%, provided:

    • you own the grapevine, or
    • the grapevine is established on Crown land you hold under a lease and is used in a primary production business.

    If you are not entitled to work out your deduction for decline in value under the provisions relating to grapevines because these conditions are not met, a deduction may be available for decline in value under the provisions relating to horticultural plants - see Horticultural plants.

    Your deduction for the decline in value of grapevines is based on the capital expenditure incurred on establishing the grapevines. Capital expenditure incurred on establishing grapevines does not include the cost of purchasing or leasing land or expenditure in draining swamp or low-lying land or in clearing land but it does include, for example, the cost of:

    • preparing the land - ploughing and topsoil enhancement
    • planting the vine itself, and
    • the vine.

    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.

    You start to deduct the decline in value of grapevines from the time you first use the grapevines in a primary production business to produce assessable income. If ownership of the grapevines changes, the remaining deduction is available to the new owner while they use the grapevines in a primary production business.

    If a grapevine is destroyed before the end of the write-off period, you are allowed a deduction in the year of destruction for the remaining unclaimed establishment expenditure less any proceeds - for example, insurance.

    If you are a primary producer and an STS taxpayer, you must use the UCA rules to work out your deductions for grapevines. For more information about STS taxpayers, see STS taxpayers.

    A recoupment of expenditure on grapevines may be assessable income. As the expenditure is deductible over more than one income year, 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. An amount received for the sale of a grapevine for its market value is not regarded as an assessable recoupment.

    Last modified: 18 Jul 2006QC 27742