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Edited version of private advice
Authorisation Number: 1012642961035
Ruling
Subject: Decline in value
Question
Are you entitled to claim a decline in value deduction for a second hand machine?
Answer
Yes.
This ruling applies for the following periods
Year ending 30 June 2014
Year ending 30 June 2015
Year ending 30 June 2016
Year ending 30 June 2017
Year ending 30 June 2018
The scheme commenced on
1 July 2013
Relevant facts
You own a number of rental properties.
You wish to buy a second hand machine to maintain and service the outside structure of the buildings and landscape the grounds.
The machine will be used exclusively for the rental properties.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 40-25
Reasons for decision
Division 40 of the Income Tax Assessment Act 1997 allows a deduction equal to the amount of the decline in value for an income year of a depreciating asset held at any time during the year. This deduction is referred to as a capital allowance deduction, is only available to the extent that the depreciating asset is used for a taxable purpose, and is generally claimed over a number of years, depending on the effective life of the asset. The effective life starts when you begin to use the asset or have it installed ready for use.
In your case, you intend purchasing a machine which will be used exclusively to maintain and service the outside structure of your rental properties and to landscape their grounds. As the machine will be used for a taxable purpose, you are entitled to claim a deduction for its decline in value.