Taxation Ruling

IT 7

Rates of depreciation - curtains and drapes

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FOI status:

Facts

It has been a long established practice that the cost of curtains and drapes used in income producing properties or business premises would be allowed as an outright deduction in the year that the furnishings were replaced.

2. A review of this policy was undertaken in 1964 but it was decided that, because of the variations in materials used, it was not practicable to estimate an effective life upon which to base a rate which could be applied generally.

3. The matter has now been re-examined in the light of changing circumstances and increased costs in recent year. Regard has also been had to the decision of the High Court in FC of T v Faichney, (1972) 129 CLR3B, where Mason, J. held, inter alia, that curtains were "articles" within the meaning of Section 54(1) of the Assessment Act.

Ruling

4. It has accordingly been decided that a depreciation rate of 15% Prime Cost (22 1/2% Diminishing Value), based on an effective life of approximately 7 years, will be applicable to all curtains and drapes acquired after 30 June 1981 and used in connection with the production of assessable income. However, assessors may continue to allow claims on a replacement basis where the amounts involved are of a minor nature.

Commissioner of Taxation
15 January 1982

References

ATO references:
NO 80/9853 F22

Date original memo issued:
15.01.82

Related Rulings/Determinations:

IT 7W

Subject References:
curtains and drapes
depreciation

Legislative References:
ITAA 55
ITAA 56

Case References:
Federal Commissioner of Taxation v Faichney
(1972) 129 CLR 38