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Edited version of your private ruling
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Ruling
Subject: Rental property asset
Question
Are you entitled to a decline in value deduction for the installation of a new heater to your rental property?
Answer
No
This ruling applies for the following period
Year ended 30 June 2012
The scheme commenced on
1 July 2011
Relevant facts and circumstances
You own a rental property and have installed new heating in the building while it was rented.
The new heating device does not replace an existing heater or fireplace, and is a new installation.
The new heating device is connected to a flue, and the main body of the heating device has been boxed in to joinery work in the structure.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 40-25,
Income Tax Assessment Act 1997 Subsection 40-30(1) and
Income Tax Assessment Act 1997 Section 43-10.
Reasons for decision
Decline in value
Section 40-25 of the Income Tax Assessment Act 1997 (ITAA 1997) allows you to deduct from your assessable income an amount equal to the decline in value of a depreciating asset to the extent that it is used to produce assessable income or installed ready for use for that purpose.
A depreciating asset is an asset that has a limited effective life and can be expected to decline in value over the time it is used (subsection 40-30(1) of the ITAA 1997).
The new heating device is not a depreciating asset as it is not considered to be a separate item of plant. It is built into the structure and it forms part of the building. Therefore you cannot claim a deduction for a decline in value under section 40 of the ITAA 1997 for the fireplace.
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