Private ruling: Decline in value
Published: June 2014
Ruling period: 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
Date scheme commenced: 1 July 2013

Ruling: Q1: Are you entitled to claim a decline in value deduction for a second hand machine? | A1: Yes.



Reasons for decision: Summary: 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.

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