Expense items in the Table of Depreciation Rates
Determination lists 'expense items' being removed from the Table of Depreciation Rates and the depreciation determinations in which they appear.
The Commissioner's Table of Depreciation Rates ('the Table') lists general economic depreciation rates and provisional depreciation rates set by the Commissioner. The Table, set out in industry and asset categories, is compiled from Tax Depreciation Determinations issued by the Commissioner.
Several of these determinations include items of property where the Commissioner has not set an estimated useful life and has included the word "expense" in the Diminishing Value Rate and the Straight Line Rate columns. For example in Determination DEP1: Tax Depreciation Rates General Determination Number 1, in the "Contractors, Builders and Quarrying" industry category items such as "Abrasive cutting wheels", "Drilling bits (except as shown) and similar tooling", "Drop sheets", and "Grinding wheels" are listed as "expense".
These items were included in the determinations for completeness. However, there is no legislative basis for non-capital items to be included in determinations. Consequently, to ensure that the Table is correct in terms of the legislation, these items are being removed from the Table as indicated below. The Commissioner stresses that correcting the Table by removing these expense items does not affect the income tax treatment of their cost. They will continue to be fully deductible, subject to the usual deductibility tests that require a sufficient connection with an income earning activity or business.
The items are being removed from the Table for one (or more) of the following reasons as noted in the attached table:
- They are consumables and fully deductible for income tax purposes (c), or
- the replacement of these items, when they are part of a larger item, would qualify as repairs and maintenance (r), or
- the items are no longer in general use in the respective industries (n).
Note that if the "replacement" items in number 2 are first purchased as part of a larger capital asset, their cost will generally be included in the cost of the larger item and depreciated at the rate set for that larger item. In such cases the item is only expensed when it is later replaced.
There may possibly be some items of property that are currently shown as "expense" that taxpayers may consider are depreciable property for which an economic depreciation rate should be set. To apply to the Commissioner for a provisional depreciation rate, download the Application for a provisional depreciation rate form.
"Expense items" being removed from the Table that are included in the following Tax Depreciation Rates Determinations
Items will still be fully deductible for income tax purposes as "consumables" under general accounting principles.
|Tax Depreciation Rates Determination||Item(s) listed as "expense"||Industry/Asset Category in Table of Depreciation rates||Reason for removal|
|Determination DEP1:Tax Depreciation Rates General Determination Number 1||Abrasive cutting wheels||Contractors, Builders and Quarrying||c or r|
|Binders||Office Equipment and Furniture||c|
|Bottles (returnable)||Brewing, winemaking and distilleries||c or n|
|Brooms||Cleaning, Refuse and Recycling||c|
|Brushes||Cleaning, Refuse and Recycling||c|
|Disks||Computers||c or n *|
|Drilling bits except diamond drill bits and saw blades||Concrete and Plaster||c or r|
|Drilling bits and similar tooling except diamond drill bits and saw blades||Contractors, Builders and Quarrying||c or r|
|Drill bits||Mining||c or r|
|Drills, taps, milling cutters, grinding wheels and similar tooling except diamond drills and saws||Engineering (including automotive)||c or r|
|Drop sheets||Contractors, Builders and Quarrying||c|
|Folders and the like||Office Equipment and Furniture||c|
|Fourdrinier wires||Pulp and Paper Manufacturing||c|
|Grinding and abrasive cutting wheels||Metal Industries (Primary) and Foundries||c or r|
|Grinding wheels||Contractors, Builders and Quarrying||c or r|
|Kiln furniture||Pottery, Tile and Brick Making||c|
|Knives, steels and the like||Meat and Fish Processing||c|
|Machine blankets||Pulp and Paper Manufacturing||c|
|Mops||Cleaning, Refuse and Recycling||c|
|Moulds (except for plaster)||Pottery, Tile and Brick making||c or n|
|Pit props (for temporary shafts)||Mining||c|
|Printing plates and stereos||Packaging (excluding plastic packaging)||c or r|
|Printing plates and stereos||Printing and Photographic||c or r|
|Protective clothing (not elsewhere specified)||Clothing||c|
|Saw blades, drill bits and the like||Timber and Joinery Industries||c or r|
|Saw blades||Contractors, Builders and Quarrying||c or r|
|Stationery||Office Equipment and Furniture||c|
|Tapes||Computers||c or n *|
|Determination DEP8: Tax Depreciation Rates General Determination Number 8||Drill bits, saw blades and the like||Medical and Medical Laboratory Equipment, or Scientific and Laboratory Equipment||c or r|
|Determination DEP17: Tax Depreciation Rate General Determination Number 17||Hydraulic hoses||Undersea maintenance||c or r|
|Determination DEP32: Tax Depreciation Rates General Determination Number 32||Newspapers and periodicals (if not to be held)||Books, music, and manuscripts||c|
*The Commissioner is considering whether to update the "Computer" asset category in view of the length of time since the depreciation rates for this industry were set (1992) and the advancement in technology since then. If the update proceeds, the Commissioner will be consulting with the industry and, before any new rates (if any) are set, all taxpayers will have the opportunity to comment through the Department's public consultative process.