ATO Interpretative Decision

ATO ID 2001/594 (Withdrawn)

Income Tax

Low cost plant costing more than $300 and less than $1,000 used in rental properties owned by small business taxpayers
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This ATO ID is withdrawn from the database because it contains a view in respect of provisions of the Income Tax Assessment Act 1997 that were repealed with effect from 1 July 2001.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.

Status of this decision: Decision Withdrawn 9 June 2006

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Should a small business taxpayer be able to allocate plant acquired after 1 July 2000 and costing more than $300 but less than $1000 to a low-value pool under Subdivision 42-M of the Income Tax Assessment Act 1997 (ITAA 1997), if the item of plant is used to produce assessable income for the taxpayer's rental property during 2000-01 income year?

Decision

No, a taxpayer who is a small business taxpayer is not able to allocate any plant to a low value pool for the income year ended 30 June 2001 as per subsection 42-460(2) of the ITAA 1997.

Facts

A small business taxpayer has a primary production business. In addition, the taxpayer earns salary and wages and derives 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 must deduct that cost pursuant to paragraph 42-167(2)(a) of the ITAA 1997.

Low value pooling is available to some taxpayers as provided for in Subdivision 42-M of the ITAA 1997. A small business taxpayer, however, is restricted by subsection 42-460(2) of the ITAA 1997 from allocating plant to a low value pool. Accordingly, a small business taxpayer with plant being used in a rental property that costs more than $300 but less than $1,000 must deduct its cost over the plant's effective life. As such, plant is not eligible for accelerated depreciation pursuant to subsection 42-345(1) of the ITAA 1997. The plant's effective life can be self assessed or determined as specified by the Commissioner's determination according to Taxation Ruling TR 2000/18.

Date of decision: 14 September 2001

Year of income: Year ended 30 June 2001

Legislative References:
Income Tax Assessment Act 1997
   Section 42-15
   Paragraph 42-167(2)(a)
   Subsection 42-345(1)
   Subsection 42-460(2)
   Subdivision 42-M
   Section 960-335

Keywords
Depreciation
Depreciation pooling
Allocation of plant to a pool
Low cost plant
Low value pool

Business Line: Centres of Expertise Capital Allowances

Date of publication: 19 November 2001

ISSN: 1445-2782

history

	Date:	Version:
	14 September 2001	Original statement
You are here →	9 June 2006	Archived

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