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Edited version of private advice
Authorisation Number: 1051824803668
NOTICE
This edited version has been found to be misleading or incorrect. It does not represent the ATO’s view of the relevant law.
This notice must not be taken to imply anything about:
● the binding nature of the private advice issued to the applicant
● the correctness of other edited versions.
Edited versions cannot be relied upon as precedent or used for determining how the ATO will apply the law in other cases.
Date of advice: 9 April 2021
Ruling
Subject: Depreciation and capital works
Question 1
Are you entitled to a deduction under Division 40 of the Income Tax Assessment Act 1997 for the following depreciating assets: furnishings, furniture, new external signage?
Answer
Yes. Depreciating assets are assets that have a limited effective life and can be expected to decline in value over the time it is used. Section 40-25 of the ITAA 1997 allows you a deduction equal to the decline in value of a depreciating asset to the extent to which it is used to produce assessable income or is installed ready for use for that purpose.
Question 2
Are you entitled to claim a capital works deduction for the painting of walls and new flooring under Division 43 of the Income Tax Assessment Act 1997?
Answer
Yes. Assets which form part of premises will be included in calculating a buildings capital works deduction. Section 43-10 of the ITAA 1997 allows you to claim a deduction for capital expenditure for the period during the year a property is used for income producing purposes.
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You purchased a business.
The franchisee agreement states that the franchisor would refurbish certain areas while the franchisee is responsible for the cost of refurbishing other areas.
The franchisor has provided new furnishings, furniture, painting of walls, new flooring and new external signage.
You are in possession of all of the refurbishment and have to maintain them for the remainder of the life of the store or until it is sold.
Relevant legislative provisions
Income Tax Assessment Act 1997 Division 40
Income Tax Assessment Act 1997 Division 43
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