The depreciation provisions are found in Division 42. A taxpayer may choose to use either method. However, if a taxpayer believes that the rates specified by the Commissioner do not properly reflect a lower effective life of a particular item of plant, a taxpayer may elect to adopt a lower effective life for that plant and, therefore, depreciate the plant at a higher rate. However, if a taxpayer adopts a higher rate of depreciation than that specified by the Commissioner, it is likely that the higher rate may be closely examined upon audit by the Taxation Office.
Maintenance involves pre-emptive work so that an item stays in working order.
That limit is annually indexed for inflation. Amounts in excess of the limit are not depreciable or deductible. In broad terms, subdivision 42F provides that when plant is disposed of, a depreciation balancing adjustment may occcur. Assets under the regime do not need to be plant or otherwise specified to be depreciated. The regime uses effective lives of assets.