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Edited version of private advice
Authorisation Number: 1051828185165
Date of advice: 21 April 2021
Ruling
Subject: Immediate deduction for the cost incurred in building a shed used to house livestock
Question 1
Is the shed a 'structural improvement' under section 45-40 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes.
Paragraph 45-40(1)(c) extends the meaning of 'plant' to include structural improvements on land used for agricultural or pastoral operations other than those used for domestic or residential purposes. In this case the shed is a structural improvement according to ordinary concepts and is constructed on land used for agricultural or pastoral operations, but not for domestic and residential purposes. The farm shed meets the extended definition of 'plant' in paragraph 45-40(1)(c) of the ITAA 1997 (see Willeroo & Manbulloo Ltd v. Federal Commissioner of Taxation (1964) 111 CLR 336; 13 ATD 356; (1964) 9 AITR 424).
Question 2
Can I claim an immediate deduction for the cost incurred building a farm shed under the instant asset write off provisions in 328-D of the ITAA 1997?
Answer
Yes.
As you are a Small Business Entity, you can choose to claim amounts for depreciating assets under Subdivision 328-D. If the farm shed is used solely to carry on the farming business, an immediate deduction is allowable for the entire cost of the shed.
This ruling applies for the following periods:
Year ended DD MM YYYY
The scheme commences on:
DD MM YYYY
Relevant facts and circumstances
You own and operate a dairy farm.
You built a shed on the dairy farm.
The shed has been used to house livestock.
The shed has not been used for domestic or residential purposes.
In the YYYY Financial Year, your aggregated turnover was between $10 million and $150 million.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 328-180
Income Tax Assessment Act 1997 Subsection 328-175(2)
Income Tax Assessment Act 1997 Section 40-45
Income Tax Assessment Act 1997 Section 43-10
Income Tax Assessment Act 1997 Section 43-70
Income Tax Assessment Act 1997 Paragraph 45-40(1)(c)
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