Private ruling: Base value of depreciating asset
Published: January 2014
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Is the depreciable value of an asset reduced by the amount of a credit voucher issued by the wholesaler of the asset after the purchase transaction? | A1: No.

Relevant facts and circumstances: You own a number of investment properties and purchased a depreciable item for each of them from a local retailer. You paid the retailer for the items. As part of a promotion by the wholesaler of the items you were later issued with a debit card in relation to each item. These debit cards can be spent at any retailer which accepts debit cards.

Relevant legislative provisions: Income Tax Assessment Act 1997 Division 40

Reasons for decision: Summary: Under Division 40 of the Income Tax Assessment Act 1997 the base value of a depreciating asset is the asset's cost. In your situation the amount you paid the retailer for the items was their cost for decline in value purposes. The debit cards issued to you after the purchase date by the wholesale supplier as part of a promotion are not considered to be a reduction in the price you paid for the items and as such they have no affect on the cost for decline in value purposes. The receipted cost to you of the items is the base value which may be used to calculate the depreciation in the income year in which they are first installed ready for use.