Taxation Ruling

IT 21

Income tax: installation costs of leased equipment

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FOI status:

may be releasedFOI number: I 1100774


The question of whether a deduction would be allowable for expenditure incurred in installing leased plant and machinery has been considered.


2. As a general proposition, expenditure incurred by a lessee in installing leased equipment is considered to be of a capital nature and, as such, would not be deductible for income tax purposes. In addition, no deduction would be allowable by way of depreciation in respect of such expenditure.

3. Where, however, the expenditure brings into existence separate items of plant or articles owned by the lessee-taxpayer then, provided the other requirements of section 54 of the Income Tax Assessment Act are met, depreciation would be allowable in respect of the plant and articles.

Commissioner of Taxation
1 April 1981


ATO references:
NO J63/447 F19

Date original memo issued:

Subject References:
installation costs
leased plant
plant-leasing costs

Legislative References:
ITAA 51(1)

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