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Edited version of your written advice
Authorisation Number: 1012869679754
Date of advice: 31 August 2015
Ruling
Subject: Decline in value for a caravan
Question
Are you entitled to a deduction for a portion of depreciation on a caravan that is partly used for income producing purposes?
Answer
Yes.
This ruling applies for the following periods
Year ended 30 June 2016
Year ended 30 June 2017
Year ended 30 June 2018
Year ended 30 June 2019
The scheme commenced on
1 July 2015
Relevant facts
You run a business.
A large amount of work is done at sites where facilities like toilets are not available.
The business travels too many sites for work, some being many kilometres away.
You have purchased a caravan which is used as a mobile office whilst also providing rest/dining area, kitchen and most importantly bathroom facilities for your workers.
The rent for a portable site office and portable toilet is very high.
The caravan will be used on occasions for private use.
Records are being kept to determine business and private usage.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 40-25.
Reasons for decision
Section 40-25 of the Income Taxation Assessment Act 1997 (ITAA 1997) allows a deduction for the decline in value (depreciation) of a depreciating asset you hold, to the extent the asset is used for a taxable purpose.
A caravan is regarded as a depreciating asset for Division 40 of the ITAA 1997 purposes.
In this case, you use the caravan for a mobile office and bathroom facilities for your business when working on sites in various locations.
It is considered that the caravan is being used for a taxable purpose for the business. You are therefore entitled to claim a deduction for decline in value under section 40-25 of the ITAA 1997 for the caravan.
Please note that as the caravan is also used for private purposes, the deduction is reduced to the extent that it is used for a non-taxable purpose.
Please refer to the Guide to depreciating assets 2015 for further details in relation to calculating your allowable depreciation amount. This booklet can be found on the Australian Taxation Office website www.ato.gov.au.