ATO Interpretative Decision
ATO ID 2001/547
Income Tax
Small business taxpayer using plant costing $300 or less in rental propertiesFOI status: may be released
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This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Can a small business taxpayer claim an immediate deduction under section 42-167 of the Income Tax Assessment Act 1997 (ITAA 1997) for plant costing $300 or less, acquired and used to produce assessable income for the taxpayer's rental properties in the 2000-01 income year?
Decision
Yes, a taxpayer, who is a small business taxpayer is able to claim an immediate deduction for plant costing $300 or less, to the extent that it is used or installed ready for use, for the purpose of producing assessable income as per paragraph 42-167(2)(a) of the ITAA 1997.
Facts
A small business taxpayer has a primary production business. In addition, the taxpayer earns salary and wages and derive income from rental property investments.
Reasons for Decision
Section 42-15 of the ITAA 1997 allows a taxpayer to deduct an amount for depreciation of a unit of plant for an income year if the taxpayer is its owner and the taxpayer uses it, or has it installed ready for use, for the purpose of producing assessable income. If the taxpayer is a small business taxpayer as defined under section 960-335 of the ITAA 1997 and the cost of plant does not exceed $300, the taxpayer may deduct that whole amount in the year it is incurred pursuant to paragraph 42-167(2)(a) of the ITAA 1997.
If taxpayers use an item of plant for a purpose other than producing assessable income, for example, private or domestic purposes, they must reduce their deduction by that part of the plant's depreciation that is attributable to their non income producing use as per section 42-170 of the ITAA 1997.
Date of decision: 14 September 2001Year of income: Year ended 30 June 2001
Legislative References:
Income Tax Assessment Act 1997
section 42-15
paragraph 42-167(2)(a)
section 42-170
subsection 42-460(2)
section 960-335
Keywords
Depreciation
Low cost plant
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 14 September 2001 | Original statement |
| 9 June 2006 | Archived |