INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 3 - Deductions  

Subdivision A - General  

SECTION 54   DEPRECIATION  

54(1A)   [Commercial debt forgiveness]  

This section has effect subject to Division 245 of Schedule 2C .

54(1)   [Depreciation deductible]  

Depreciation during the year of income of any property, being plant or articles owned by a taxpayer and used by him during that year for the purpose of producing assessable income, and of any property being plant or articles owned by the taxpayer which has been installed ready for use for that purpose and is during that year held in reserve by him shall, subject to this Act, be an allowable deduction.

54(2)   [``plant'' extended]  

In this section, ``plant'' includes:


(a) animals used as beasts of burden or working beasts in a business other than a business of primary production, and machinery, implements, utensils and rolling stock;


(b) any of the following:


(i) fences, dams and other structural improvements on land which is used for the purposes of agricultural or pastoral pursuits;

(ii) structural improvements (not including an improvement that is an access road as defined by section 124E ) completed after the year of income that ended on 30 June 1963 on land that is used for the purposes of forest operations;

(iii) structural improvements completed after 30 June 1958 which are used wholly and exclusively for the purposes of pearling operations and are situated at or in the vicinity of a port or harbour from which those operations are conducted;
other than structural improvements used for domestic or residential purposes except where the improvements are provided for the accommodation of employees, tenants or sharefarmers engaged in or in connection with those pursuits or operations, as the case may be; and


(c) plumbing fixtures and fittings, including wall and floor tiling, in premises acquired after 30 June 1938, or installed in premises after that date, by a person (the ``primary person'' ) carrying on a business for the purpose of producing assessable income, where those fixtures and fittings are provided principally for:


(i) the use, for personal purposes, of persons of either or both of the following kinds:

(A) persons employed in that business by the primary person;

(B) persons employed in a business, carried on for the purpose of producing assessable income, by a company that is related (within the meaning of section 5 lAE) to the primary person; or

(ii) the care of children of any of those persons.

54(2A)   [Property subject to 100% depreciation]  

If the annual depreciation percentage fixed under section 55 for a unit of property owned by a taxpayer is 100%, depreciation is only allowable for the year of income in which the property is first used, or first installed and held in reserve, as mentioned in subsection (1).

54(3)   [Leisure facility]  

Depreciation of any property that is a leisure facility for the purposes of section 51AB is not an allowable deduction.

54(3A)   [When subsec (3) not applicable]  

The rule in subsection (3) does not apply in relation to property to the extent (if any) to which a fringe benefit (within the meaning of the Fringe Benefits Tax Assessment Act 1986 ) is constituted by the use of the property.

54(4)   [Part-year use of leisure facility]  

Subsection (3) does not prevent depreciation of any property from being an allowable deduction to the extent, if any, to which the depreciation took place during a part of the year of income referred to in paragraph 51AB(5)(a) .

54(5)   [Depreciation not additional to deduction under s 75B]  

Subject to subsection (6), depreciation of a unit of property is not an allowable deduction to a taxpayer in respect of any year of income if expenditure incurred by the taxpayer or another person in respect of the unit of property:


(a) has been allowed, or is allowable, as a deduction under section 75B from the assessable income of the taxpayer or that other person of any year of income; or


(b) would have been allowed, or would be allowable, as a deduction under that section from the assessable income of any year of income of the taxpayer or that other person but for subsection (4) of that section.

54(6)   [Operation of subsec (5)]  

Subsection (5) does not operate to prevent depreciation being allowed to a taxpayer in respect of expenditure incurred in respect of a unit of property to the extent to which a deduction has not been allowed, and is not allowable, under section 75B (otherwise than by reason of the operation of subsection (4) of that section) to any taxpayer in respect of that expenditure.

54(7)  

54(8)  

54(9)   [Expenditure deductible under s 75D]  

Subject to subsection (10), depreciation of a unit of property is not an allowable deduction to a taxpayer in respect of any year of income if expenditure incurred by the taxpayer or another person in respect of the unit of property:


(a) has been allowed, or is allowable, as a deduction under section 75D from the assessable income of the taxpayer or that other person of any year of income; or


(b) would have been allowed, or would be allowable, as a deduction under that section from the assessable income of any year of income of the taxpayer or that other person but for subsection (4) of that section.

54(10)   [Expenditure partly deductible under s 75D]  

Subsection (9) does not operate to prevent depreciation being allowed to a taxpayer in respect of expenditure incurred in respect of a unit of property to the extent to which a deduction has not been allowed, and is not allowable, under section 75D (otherwise than by reason of the operation of subsection (4) of that section) to any taxpayer in respect of that expenditure.

54(11)   [Research and development activities]  

Depreciation of a unit of property, not being a unit in respect of which an election has been made under subsection 73B(18) , that has been installed ready for use exclusively for the purpose of the carrying on of research and development activities within the meaning of section 73B and that is held in reserve for that purpose is not an allowable deduction to a taxpayer under this section.


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