ATO Interpretative Decision
ATO ID 2001/17 (Withdrawn)
Deductions and expenses: Depreciation (Rental Property Furniture)
FOI status: may be released
||'This ATO ID is withdrawn from the database because it contains a view in respect of a provision of the Income Tax Assessment Act 1936 that does not apply after the 1996-97 income year. Despite its withdrawal from the database, this ATO ID continues to be a precedential view in respect of decisions for income years up to, and including, the 1996-97 income year.'
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Status of this decision: Decision Withdrawn 9 June 2006
|CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.|
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Whether the furniture in a property let as fully furnished constitutes plant or articles subject to depreciation and, if so, whether an immediate deduction can be claimed where such items cost exactly $300, or less.
Furniture in a property let as fully furnished does constitute plant or articles subject to depreciation and an immediate deduction can be claimed where such items cost exactly $300, or less.
The taxpayer has a rental property which was advertised for rental on a fully-furnished basis from 7 June 1997. However, rental was not secured until after the end of the financial year.
Furthermore, the current lease is for a short-term and the taxpayer may offer the rental property on an unfurnished basis if it proves difficult to let on a fully furnished basis.
In this scenario, the household items may be absorbed for private use, placed in storage, or disposed of.
Reasons For Decision
A deduction for depreciation is allowable on property which qualifies as plant or articles used during the year for the purposes of producing assessable income or installed ready for use for that purpose and held in reserve under the Income Tax Assessment Act 1936 subsection 54(1) or the Income Tax Assessment Act 1997 section 42-15.
Items held in a property that is available for letting will be depreciable, provided it can be shown that active and bona fide efforts were made to obtain tenants during that time.
As this furniture constitutes depreciable items of plant or articles costing exactly $300 (or less), an immediate deduction can be claimed for those items. The Income Tax Assessment Act 1936 Subsection 55(2) or the Income Tax Assessment Act 1997 section 42-167 allows an outright deduction, that is a prime cost rate of depreciation of 100%, for individual items costing $300 or less (Taxation Determination TD 93/159).
There is no minimum period of time depreciable plant or articles must remain in a rental property before an outright deduction is allowed. An immediate deduction is allowable if the depreciable items are used in a rental property earning income or are installed ready for use in a rental property in order to produce income.
Date of decision: 23 September 1997
Income Tax Assessment Act 1936
Income Tax Assessment Act 1997
Related Public Rulings (including Determinations)
Business line: Small Business/Individual Taxpayers
Date of publication: 4 June 2001