House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Scott Morrison MP)

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Limiting depreciation deductions for assets in residential premises

2.95 This Schedule is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

2.96 Schedule 2 to the Bill amends the ITAA 1997 to deny income tax deductions for the decline in value of 'previously used' depreciating assets (plant and equipment) used in gaining or producing assessable income from the use of residential premises for the purposes of residential accommodation.

2.97 However, the amendments do not affect deductions that arise:

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in the course of carrying on a business; or

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for corporate tax entities, superannuation plans other than self managed superannuation funds, managed investment trusts, public unit trusts and unit trusts or partnerships if each member of the unit trust or partnership is one of these entities.

2.98 The proportion of the decline in value of assets that cannot be deducted is recognised as a capital gain or loss when the asset ceases to be used.

Human rights implications

2.99 This Schedule does not engage any of the applicable rights or freedoms.

Conclusion

2.100 This Schedule is compatible with human rights as it does not raise any human rights issues.