Income Tax Assessment Act 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-10 - CAPITAL ALLOWANCES: RULES ABOUT DEDUCTIBILITY OF CAPITAL EXPENDITURE  

Division 40 - Capital allowances  

Subdivision 40-B - Core provisions  

Operative provisions

SECTION 40-30   What a depreciating asset is  

40-30(1)    

A depreciating asset is an asset that has a limited ^* effective life and can reasonably be expected to decline in value over the time it is used, except:

(a)    land; or

(b)    an item of ^* trading stock; or

(c)    an intangible asset, unless it is mentioned in subsection (2) .

40-30(2)    

These intangible assets are depreciating assets if they are not ^* trading stock:

(a)    ^* mining, quarrying or prospecting rights;

(b)    ^* mining, quarrying or prospecting information;

(ba) (Repealed by No 96 of 2014)

(bb) (Repealed by No 96 of 2014)

(c)    items of ^* intellectual property;

(d)    ^* in-house software;

(e)    ^* IRUs;

(f)    ^* spectrum licences;

(g) (Repealed by No 151 of 2020)

(h)    

^* telecommunications site access rights.

40-30(3)    
This Division applies to an improvement to land, or a fixture on land, whether the improvement or fixture is removable or not, as if it were an asset separate from the land.

Note 1:

Whether such an asset is a depreciating asset depends on whether it falls within the definition in subsection (1) .

Note 2:

This Division does not apply to capital works for which you can deduct amounts under Division 43 : see subsection 40-45(2) .

40-30(4)    
Whether a particular composite item is itself a depreciating asset or whether its components are separate depreciating assets is a question of fact and degree which can only be determined in the light of all the circumstances of the particular case.

Example 1:

A car is made up of many separate components, but usually the car is a depreciating asset rather than each component.

Example 2:

A floating restaurant consists of many separate components (like the ship itself, stoves, fridges, furniture, crockery and cutlery), but usually these components are treated as separate depreciating assets.

40-30(5)    
This Division applies to a renewal or extension of a ^* depreciating asset that is a right as if the renewal or extension were a continuation of the original right.

40-30(6)    

This Division applies to a ^* mining, quarrying or prospecting right (the new right ) as if it were a continuation of another mining, quarrying or prospecting right you ^* held if:

(a)    the other right ends; and

(b)    

any of the following conditions are satisfied:

(i) the new right and the other right relate to the same area, or any difference in area is not significant;

(ii) the new right relates to an area that is a part of the area that the other right relates to.

Note:

If the other right does not end, it may be taken to be split into 2 assets: see section 40-122 .

40-30(7)    

For the purposes of subsection (6) , it does not matter whether the new right begins immediately after the other right ends or later (including in a later income year).