Clarity for rental property deductions
28 June 2004
Owners of residential rental
properties will today get increased certainty about the tax
deductions they can claim for depreciating assets.
Tax Office Commissioner
Mr Michael Carmody said there is now a list of
more than 150 depreciating assets, a substantial increase over
the previous list. This list includes effective lives previously
determined, and revised and new determinations.
The new effective lives will only apply to assets acquired from
1 July 2004.
"We have also reviewed the existing effective life
determinations. The result of this review is that people will be
able to claim their deductions for a majority of these items
over a shorter period where they have been acquired from 1 July
2004," Mr Carmody said.
Tax Commissioner Carmody said this new list will provide
clarity to property owners, particularly those new to the
market, on the allowable deductions for depreciating assets.
More than 1.3 million taxpayers claimed rental property
deductions in 2002-03. More than 220,000 of them were new rental
property owners.
"This comprehensive list of depreciable items and their
effective lives will reduce uncertainty, risks and overall costs
for taxpayers," Mr Carmody said.
"It will help remove doubt that has led to items being
misclassified and deductions being incorrectly claimed."
"And it will provide useful guidance for people lodging their
income tax returns."
In addition, the release of a draft tax ruling today will help
people work out whether items in their properties are
depreciating assets or are eligible for capital works
deductions.
Background
The practice of the Australian Tax Office making effective life
determinations began in September 1999. Changes are announced
every six months. The Tax Office has looked at depreciating
assets normally found in residential properties and the period
over which deductions can be claimed for those assets. This
period is known as an asset's effective life.
The Tax Office has consulted with tax professional associations,
the Australian Institute of Quantity Surveyors and the Property
Council of Australia in preparing effective life changes and the
draft ruling.
The ruling on the effective life of depreciating assets (TR
2000/18C7) and the draft ruling on plant in residential
properties (TR 2004/D3), which is open for public comment until
4 August 2004, will be on the Tax Office website,
http://law.ato.gov.au/atolaw/index.htm
