INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 3 - Deductions  

Subdivision A - General  

SECTION 55   ANNUAL DEPRECIATION PERCENTAGE  

55(1)   [Calculation of percentage]  

The annual depreciation percentage for a unit of property owned by a taxpayer is worked out as follows.

55(2)   Step 1: 100% depreciation .  

If:

(a) either:

(i) the cost of the property does not exceed $300 or such higher amount as is prescribed; or

(ii) the effective life of the property is less than 3 years; and

(b) the taxpayer does not nominate, in accordance with subsection (8), an annual depreciation percentage less than 100%;

the annual depreciation percentage is 100%.

55(3)   Step 2: scientific research .  

If:

(a) step 1 does not apply; and

(b) the property is used by the taxpayer for the purposes of scientific research only; and

(c) either:

(i) the effective life of the property is 5 years or more; or

(ii) the property is an eligible motor vehicle or an eligible artwork; and

(d) the property was acquired by the taxpayer before 1 July 1995; and

(e) the taxpayer does not nominate, in accordance with subsection (8), an annual depreciation percentage less than 50%;

the annual depreciation percentage is 50%.

55(4)   Step 3: employee amenities .  

If:

(a) neither step 1 nor 2 applies; and

(b) the property is used by the taxpayer principally for the purpose of providing clothing cupboards, first aid, rest-room or recreational facilities, or meals or facilities for meals:

(i) for persons of either or both of the following kinds:

(A) persons employed by the taxpayer in a business carried on by the taxpayer for the purpose of producing assessable income;

(B) persons employed by a company that is related (within the meaning of section 51AE ) to the taxpayer in a business carried on by the company for the purpose of producing assessable income; or

(ii) for the care of children of those persons; and

(c) either:

(i) the effective life of the property is 5 years or more; or

(ii) the property is an eligible motor vehicle or an eligible artwork; and

(d) the taxpayer does not nominate, in accordance with subsection (8), an annual depreciation percentage less than 50%;

the annual depreciation percentage is 50%.

55(5)   Step 4: general rates .  

If:

(a) none of steps 1, 2 and 3 apply; and

(b) the property is not an eligible motor vehicle; and

(c) the property is not an eligible artwork; and

(d) the taxpayer does not nominate, in accordance with subsection (8), an annual depreciation percentage less than the percentage worked out using the following table;

the annual depreciation percentage is worked out using the following table:

Years in effective life	Annual depreciation percentage
3 to fewer than 5	60%
5 to fewer than 6	40%
6 to fewer than 10	30%
10 to fewer than 13	25%
13 to fewer than 30	20%
30 or more	10%

55(6)   Step 5: special broadbanded rates for eligible motor vehicles .  

If:

(a) none of steps 1, 2, 3 and 4 apply; and

(b) the property is an eligible motor vehicle; and

(c) the taxpayer does not nominate, in accordance with subsection (8), an annual depreciation percentage less than the percentage worked out using the following table;

the annual depreciation percentage is worked out using the following table:

Years in effective life	Annual depreciation percentage
3 to fewer than 5	50%
5 to fewer than 6	30%
6 to fewer than 10	22.5%
10 to fewer than 13	15%
13 to fewer than 20	11.25%
20 to fewer than 40	7.5%
40 or more	3.75%

55(7)   Step 6: special loaded rates for eligible artworks .  

If:

(a) none of steps 1, 2, 3, 4 and 5 apply; and

(b) the property is an eligible artwork; and

(c) the taxpayer does not nominate, in accordance with subsection (8), an annual depreciation percentage less than the percentage calculated (to 2 decimal places) using the following formula;

the annual depreciation percentage is the percentage calculated (to 2 decimal places) using the formula:

1.8       No. of years in effective life

×     100

where:

``No. of years in effective life'' means the number (calculated to 2 decimal places) of years in the effective life of the property.

55(8)   [Taxpayer's option]  

A taxpayer may nominate a percentage as the annual depreciation percentage for a specified unit of property in respect of which depreciation is first allowable to the taxpayer for a year of income if the nominated percentage is:

(a) less than the percentage that would otherwise be that annual depreciation percentage; and

(b) equal to or greater than the percentage calculated (to 2 decimal places) using the formula:

1.5       No. of years in effective life

×     100

where:

``No. of years in effective life'' means the number (calculated to 2 decimal places) of years in the effective life of the property.

55(8A)   [Effect of nomination]  

A nomination under subsection (8) has effect for the purposes of determining the depreciation allowable to the taxpayer in respect of the unit of property for the year of income mentioned in that subsection and for all later years of income.

55(9)   [Definitions]  

In this section:

"eligible artwork"
means:

(a) a painting, sculpture, drawing, engraving or photograph; or

(b) a reproduction of any such thing; or

(c) property of a description, or of a use, similar to anything covered by paragraph (a) or (b);

"eligible motor vehicle"
means a motor vehicle (including a vehicle known as a four wheel drive vehicle) that is:

(a) a motor car, station wagon, panel van, utility truck or similar vehicle, other than a panel van or utility truck designed to carry a load of one tonne or more; or

(b) a motor cycle or similar vehicle; or

(c) any other road vehicle designed to carry a load of less than one tonne or fewer than 9 passengers;

"scientific research"
has the same meaning as in section 73A .