Edited version of private advice

Authorisation Number: 1052118691968

Date of advice: 15 May 2023

Ruling

Subject: Work related deductions

Question

Is the power wall battery a depreciating asset?

Answer

Yes.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You work for a company.

Your primary work location is your home.

You use equipment to carry out your work duties which is owned by you and your employer at home.

You live in a rural area and there is unreliable power supply.

Due to wanting to protect your equipment you want to install a battery backup solution.

You intend on using a power wall battery backup.

You want to use a power wall battery backup so when the property when disconnected from the grid still provides power, as well as surge protection for the sensitive equipment.

The battery backup would be wired into your main residence and provide power to the property for both work and private uses.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 40-25

Reasons for decision

Section 40-25 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for the decline in value of a depreciating asset that you hold. A depreciating asset is an asset that can reasonably be expected to decline in value over time it is used (section 40-30 of ITAA 1997).

Depreciating assets are those items that can be described as plant, which do not form part of the premises. These items are usually: separately identifiable; not likely to be permanent and expected to be replaced within a relatively short period and not part of the structure. Examples of assets that deductions for decline in value can be applied to include timber flooring, carpets, curtains, appliances like a washing machine or fridge and furniture.

Taxation ruling 2022/1 (TR 2022/1) considers the effective life of depreciating assets.

The ruling provides that emergency power supply assets including batteries and uninterruptible power supply assets have a useful life of 15 years.

The Commissioner is of the opinion that power wall batteries fit into this category of depreciating asset as they are installed into the AC network of a home and generate solar power that the house can use.

You will need to account for the business/private usage of the battery using a fair and reasonable basis of apportionment as per (subsection 40-25(2)) of the ITAA 1997.

Some of the things you will need to take into consideration when apportioning the expense are:

•         The number of hours you work from home

•         The number of people in the household and whether they are present when you are working

•         How many other electrical items the battery will power in an outage

•         The power required to run the equipment as opposed other electrical items.

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