Appendix 1: Capital works deductions

Last updated 12 July 2020

Division 43 of the ITAA 1997 provides for a system of deducting capital expenditure incurred in the construction of capital works used to produce assessable income.

Capital works

Who can claim?

Lessee of a building

Requirement for deductibility

No deduction until construction is complete

Establishing the deduction base

Construction expenditure

Construction expenditure area

Pool of construction expenditure

Deductible use

Special rules about uses

Calculation and rate of deduction

Capital works begun before 27 February 1992 and used as described in table 43-140 of the ITAA 1997

Capital works begun after 26 February 1992

Undeducted construction expenditure

Balancing deduction on destruction

QC20485