Private ruling: Depreciation
Published: March 2015
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Is a caravan subject to motor vehicle cost limits for the purpose of depreciation? | A1: No

Relevant facts and circumstances: You are purchasing a new caravan in 20XX. It is intended that the caravan will be used in relation to your business.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 40-230 | Income Tax Assessment Act 1997 Section 995-1

Reasons for decision: Summary: Subsection 40-230(1) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the first element of the cost of a car designed mainly for carrying passengers is reduced to the car limit for the financial year in which you started to hold it if it's cost exceeds that limit. Section 995-1 of the ITAA 1997 defines a car as a motor vehicle (except a motor cycle or similar vehicle) designed to carry a load of less than 1 tonne and fewer than 9 passengers. In your case, your caravan does not meet the definition of a car for income tax purposes. Therefore, the car limit in section 40-230 of the ITAA 1997 does not apply for the purposes of working out the caravan's decline in value. | Detailed Reasoning - Other information: Please note: This ruling provides no determination on the income tax deductibility or otherwise, of the capital allowances or any other expenses in relation to the caravan.