ATO Interpretative Decision

ATO ID 2001/130 (Withdrawn)

Income Tax

Depreciation of commercial swimming pool
FOI status: may be released

This ATO ID is withdrawn from the database because it contains a view in respect of provisions of the Income Tax Assessment Act 1997 that were repealed with effect from 1 July 2001.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 provisions.'

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 the taxpayer, the owner-operator of a commercial swimming pool complex, deduct an amount for depreciation of the in-ground, concrete swimming pool in the complex under section 42-15 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision

Yes, the taxpayer can deduct an amount for depreciation of the swimming pool under section 42-15 (ITAA 1997).

Facts

The taxpayer owns and operates a commercial swimming pool complex. The taxpayer's swimming pool complex is open to the public for their use. The swimming pool is mainly used by schools, swimming clubs, private swimming tutors and their students.

The taxpayer charges a fee for admission to the complex and for the use of the facilities, including the swimming pool. The taxpayer derives income from the admission charges.

Reasons For Decision

Under section 42-15 (ITAA 1997), the owner or quasi-owner of a unit of plant may deduct an amount for depreciation of that plant in an income year if the plant is used for the purpose of producing assessable income, or is installed ready for use for that purpose and is held in reserve.

Whether an item is 'plant' is not primarily a question of law, though it involves an understanding of the law, but the question is primarily one of fact and degree: Carpentaria Transport v. FC of T (1990) 21 ATR 513; 90 ATC 4590.

In determining whether an item is plant, it is necessary to establish whether the item may be regarded as apparatus used by the taxpayer in carrying on a business. It is also necessary to determine whether the function of the item is such that the item may be regarded as plant and not just as a convenient setting for the operation of the business: Wangaratta Woollen Mills Ltd v. FC of T (1969) 119 CLR 1.

In this case, the taxpayer uses the pool for income producing purposes. The pool is readily identifiable as part of the apparatus used by the taxpayer in carrying on his or her business and it is integral to the taxpayer's income earning activities. The pool is clearly more than a mere setting for the business. Accordingly, the pool qualifies as 'plant' for the purposes of the inclusive definition in section 42-18 (ITAA 1997) and the taxpayer can deduct an amount for depreciation of the pool.

This conclusion is consistent with the decision in the UK case Cooke (Inspector of Taxes) v. Beach Station Caravans Ltd[1974] 3 All ER 159, where it was concluded that swimming pools and their attendant apparatus that are constructed for the use of customers of a caravan site are plant.

[Note 1: Taxation Determination TD 92/190 states that a swimming pool used occasionally by a primary producer for fire fighting purposes does not qualify as plant used for income producing purposes. However, the facts considered in Taxation Determination TD 92/190 may be distinguished from those considered in this case. Accordingly, the conclusion reached in Taxation Determination TD 92/190 is not relevant here.

Note 2: the Commissioner does not consider that the decision in Case T102 86 ATC 1178; Case 11 (1986) 18 ATR 3052 should be applied to deny depreciation for a swimming pool used by a taxpayer as part of the apparatus in carrying on their business. Case T102 86 ATC 1178; Case 11 (1986) 18 ATR 3052 should be confined to its facts.]

Date of decision: 9 June 2000

Legislative References:
Income Tax Assessment Act 1997
section 42-15
section 42-18

Case References:
Carpentaria Transport v. FC of T
(1990) 21 ATR 513
90 ATC 4590

Cooke (Inspector of Taxes) v. Beach Station Caravans Ltd
[1974] 3 All ER 159

Case T102
86 ATC 1178

Case 11
(1986) 18 ATR 3052

Wangaratta Woollen Mills Ltd v. FC of T
   (1969) 119 CLR 1
   69 ATC 4095
   (1969) 1 ATR 329

Broken Hill Proprietary Co. Ltd v. FC of T
   (1969) 120 CLR 240
   (1969) 1 ATR 40
   69 ATC 4028

Related Public Rulings (including Determinations)
TD 92/190

Related ATO Interpretative Decisions
ATO ID 2001/95

Keywords
Deductions & expenses
Depreciation expenses
Depreciation
Depreciation rates
Swimming pools & pool equipment

Business Line: Private Groups and High Wealth Individuals

Date of publication: 1 August 2001

ISSN: 1445-2782

history

	Date:	Version:
	9 June 2000	Original statement
You are here	9 June 2006	Archived

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