Private ruling: Depreciation
Date of advice: 24 September 2015
Published: September 2015
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Question and answer | Can the items you purchased be depreciated over 4 years? | No.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You are in business. You purchased a business in the 2015 income year. You purchased items as part of the sale contract for the business.

Relevant legislative provisions: Income tax Assessment Act 1997 Section 40-25(1). | Income Tax Assessment Act 1997 Section 995-1(1).

Reasons for decision: Summary: You can deduct an amount equal to the decline in value for an income year of a depreciating asset under subsection 40-25 (1) of the Income Tax Assessment Act 1997 ( ITAA 1997). A depreciating asset is defined in section 40-30 of the ITAA 1997 and excludes an intangible asset unless it is an item of intellectual property or in-house software. Subsection 995-1(1) of the ITAA 1997 states that in-house software is computer software, or a right to use computer software, that you acquire, develop or have another entity develop that is mainly for you to use in performing the functions for which the software was developed. In your case as per the contract of sale you purchased items. The items do not meet the definition of in-house software under subsection 995-1(1) of the ITAA 1997 Consequently, you are not entitled to depreciate the cost of the items under section 40-25 (1) of the ITAA 1997.