ATO Interpretative Decision
ATO ID 2002/1011 (Withdrawn)
Income Tax
Depreciation - Rental Property (plant or capital works)FOI status: may be released
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'This ATO ID is withdrawn from the database because it contains a view in respect of a provision of the Income Tax Assessment Act 1997 that was repealed with effect from 1 July 2001. Despite its withdrawal from the database, this ATO ID continues to be a precedential view in respect of decisions relating to the former provision.
The current ATO view on this issue is contained in Rental Properties (NAT 1729).'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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Is a deduction for depreciation of an automatic hydraulic door closer, a smoke alarm, gymnasium equipment and security swipe card system contained in a rental property available under section 42-15 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
Yes. All of the items satisfy the definition of 'plant' and a depreciation deduction is available under section 42-15 of the ITAA 1997.
Facts
The taxpayer owns a rental property which is rented or available for rent on a commercial basis at all times. The taxpayer wants to claim depreciation deductions in respect of certain items contained in the property on the basis that the items are 'plant' for depreciation purposes. The items are:
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- Automatic hydraulic door closer (inter-related mechanical parts with separate functions to detect an opened door and to close it without human intervention)
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- Smoke alarm (interrelated parts with separate functions to detect smoke and to transmit signal and sound)
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- Gymnasium equipment (freestanding machines used for various forms of exercise); and
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- Security swipe card system (mechanical apparatus that reads a swiped card in order to control access through external doors of a building).
Reasons for Decision
Section 42-15 of the ITAA 1997 allows a deduction for depreciation of a unit of plant that is owned and used for the purpose of producing assessable income.
Plant is defined in section 42-18 of the ITAA 1997 to include articles and machinery. An item that falls within the meaning of machinery will always be plant, irrespective of whether or not it is annexed to land or buildings (Carpentaria Transport Pty Ltd v. F C of T (1990) 20 ALD 769; (1990) 21 ATR 513; 90 ATC 4590).
The automatic hydraulic door closer, smoke alarm, gymnasium equipment and security swipe card system are all considered to be either articles or machinery and, therefore, plant.
As the plant is owned and used for the required purpose, a depreciation deduction is available to the taxpayer.
Date of decision: 30 August 2002Year of income: Year ended 30 June 2001
Legislative References:
Income Tax Assessment Act 1997
section 42-15
section 42-18
Case References:
Carpentaria Transport Pty Ltd v. Federal Commissioner of Taxation
(1990) 20 ALD 769
(1990) 21 ATR 513
90 ATC 4590
Keywords
Depreciation
Depreciable plant
Depreciable plant & articles
Depreciation deduction
Plant installed ready for use
ISSN: 1445-2782
| Date: | Version: | |
| 30 August 2002 | Original statement | |
| You are here | 9 June 2006 | Archived |