Fire preparedness and prevention expenses for primary producers



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If you follow our information in this publication and it turns out to be incorrect, or it is misleading and you make a mistake as a result, we must still apply the law correctly. If that means you owe us money, we must ask you to pay it but we will not charge you a penalty. Also, if you acted reasonably and in good faith we will not charge you interest.

If you make an honest mistake in trying to follow our information in this publication and you owe us money as a result, we will not charge you a penalty. However, we will ask you to pay the money, and we may also charge you interest. If correcting the mistake means we owe you money, we will pay it to you. We will also pay you any interest you are entitled to.

If you feel that this publication does not fully cover your circumstances, or you are unsure how it applies to you, you can seek further assistance from us.

This publication was current as at October 2018.

Can you claim a tax deduction? What you need to know.

Capital costs or revenue costs

This fact sheet mainly concerns special deductions that are available for various capital costs. Capital costs are costs that provide a lasting benefit (such as the cost of business assets) and are otherwise not usually deductible. If your expenses are revenue expenses (that is, normal business operating expenses such as the cost of maintaining firebreaks), these expenses are deductible anyway under the normal deduction provisions.

Private expenses

You cannot claim a deduction for fire preparedness and prevention expenses that are private in nature (for example, expenses related to protecting your private residence).

Water facilities

You can claim an immediate deduction for the cost of all water facilities you use in your primary production business, including for the purposes of fire emergency preparedness and prevention.

A water facility is:

plant or a structural improvement that is mainly for the purpose of conserving or conveying water (for example, dams, tanks, bores or sprinkler systems)
a structural improvement that is reasonably incidental to conserving or conveying water
alterations, extensions or capital repairs to the above.

What you can claim

You can claim a deduction for the cost of:

quick fill pumps
high rise drive under water tanks
lightweight water tanks for utility vehicles
fire protection sprinkler systems in sheds
fire dams.

What you cannot claim

You cannot claim for the purchase or installation costs of a swimming pool, even if the pool is occasionally used to draw water for fire-fighting purposes.

However, if the pool is equipped with an extra pump to be used solely for fire-fighting purposes, you can claim the cost of the extra pump.

Other capital expenses

What you can claim

You can claim a decline in value (depreciation) deduction for the cost of the following assets based on their effective life:

fire extinguishers
fire shields made of non-combustible materials to protect water tanks and electrics on sheds
wind breaks of permanent materials like rocks and iron (where they have a limited effective life and can reasonably be expected to decline in value).

What you cannot claim

You cannot claim a deduction for the following capital costs - but you can add them to the cost base of the land for capital gains tax purposes (this will reduce your capital gain if you sell the land):

the cost of wind breaks of permanent materials like rocks and iron that do not have a limited effective life (and can be economically maintained for an indefinite period)
the initial costs of creating fire breaks.

Other expenses

You can claim a deduction for:

personal protective items such as goggles, gloves and fire trousers (but not conventional clothing)
low value capital items that cost up to $100 each (such as hand tools)
ongoing fire break maintenance (after the initial fire break is cleared)
the cost of recharging fire extinguishers.

ATO view

Search ato.gov.au for:

Water facilities
Taxation Determination TD 92/190 Income tax: is the installation cost of an in-ground swimming pool an allowable deduction to a primary producer if the water is used on occasions for fire fighting purposes?
Guide to depreciating assets 2018
Taxation Ruling TR 2003/16 Income tax: deductibility of protective items

What if you need more information?

If you wish to discuss your circumstances, call the ATO on 13 28 66.

© AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA

You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).

Siebel/TDMS Reference Number:  1-FIM2RT4

Date of publication:  12 October 2018