Income tax: can the cost of plant purchased for a specific project, and fully charged to the client, but which is still held after that project was completed and able to be used again, be treated as fully deductible under subsection 51(1) or under the depreciation provisions of the Income Tax Assessment Act 1936?
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FOI status:may be releasedFOI number: I 1216211
Notice of Withdrawal
1. Taxation Determination TD 93/189, which issued 30 September 1993, considers the deductibility, under subsection 51(1) and the depreciation provisions of the Income Tax Assessment Act 1936 (ITAA 1936), of the cost of a depreciating asset that a taxpayer acquires to assist them to undertake a specific client project for which they receive an assessable fee. The Taxation Determination states that the cost is dealt with under the depreciation provisions.
2. Both of these provisions were rewritten in 1997 as part of the Tax Law Improvement Project. Subsection 51(1) of the ITAA 1936 was replaced by section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) and the depreciation provisions were replaced by Division 42 of the ITAA 1997. From 1 July 2001, Division 42 was replaced by Division 40 of the ITAA 1997.
Commissioner of Taxation
10 May 2006
NO NOR J36/355/8ISSN 1038 - 8982
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