Plant and equipment depreciation deductions

Income tax deductions for the decline in value of previously used plant and equipment in rental premises used for residential accommodation are no longer allowed. The changes are now law.

What is plant and equipment ?

Plant and equipment assets are items which are considered by the Australian Taxation Office to be easily removable from the property.

Residential Property:

  • Hot water systems, heaters, solar panels
  • Air-conditioning units
  • Blinds and curtains
  • Light shades
  • Swimming pool filtration and cleaning systems
  • Security systems.

The changes apply from 1 July 2017 to:

  • previously used plant and equipment acquired at or after 7.30 pm on 9 May 2017 unless it was acquired under a contract entered into before this time
  • plant and equipment acquired before 1 July 2017 but not used to earn income in either the current or previous year.

Investors who purchase new plant and equipment will continue to be able to claim a deduction over the effective life of the asset.

The changes do not affect deductions that arise in the course of carrying on a business, or for:

  • corporate tax entities
  • superannuation plans other than self-managed superannuation funds
  • public unit trusts
  • managed investment trusts
  • unit trusts or partnerships whose members are the above listed entities.