Income tax: if a purchase of depreciable plant comprises individual items costing $300 or less each or having an effective life of less than 3 years, can these individual items be depreciated at the rate of 100% in terms of subsection 55(2) of the Income Tax Assessment Act 1936 ?
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FOI status:may be releasedFOI number: I 1215889
|This Determination, to the extent that it is capable of being a 'public ruling' in terms of Part IVAAA of the Taxation Administration Act 1953 , is a public ruling for the purposes of that Part. Taxation Ruling TR 92/1 explains when a Determination is a public ruling and how it is binding on the Commissioner. Unless otherwise stated, this Determination applies to years commencing both before and after its date of issue. However, this Determination does not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of the Determination (see paragraphs 21 and 22 of Taxation Ruling TR 92/20).|
- - is regarded as a whole,
- - is capable of being separately identified, and
- - has a separate function,
2 The 100% depreciation rate only applies to depreciable plant acquired on or after 1 July 1991. Depreciation at the 100% rate is deductible in the year of income in which the depreciable plant is first used by the taxpayer for the purpose of producing assessable income or is installed ready for use for that purpose.
3. When eligible depreciable plant is acquired during the income tax year and is depreciated at the 100% rate, the taxpayer is entitled to claim the full deduction in that income tax year, provided that the plant is used solely for business purposes. If the plant is used partly for the purpose of producing assessable income and partly for private purposes, the deduction allowable is reduced by the private portion.
1. A taxpayer purchases 20 chairs at $250 each during the 1992-1993 income year which are used for the purpose of producing assessable income. Each chair satisfies the requirements set out in paragraph 1. Unless the taxpayer nominates a lower rate, the depreciation deduction allowable in the 1992-1993 income year is:
20 x $250 = $5000.
Commissioner of Taxation
NO NEW TD36