D E P R E C I AT I O N 1 01
WHAT ARE PLANT AND EQUIPMENT DEPRECIATION DEDUCTIONS?
BY BRADLEY BEER, B M T TA X D E P R E C I AT I O N
When your specialist quantity surveyor tells you that you can claim depreciation on almost anything, they mean it. You can claim depreciation on your investment property’s walls, furniture to its mailbox and the kitchen sink.
What are plant and equipment
the diminishing value or prime cost
depreciation deductions?
method.
As mentioned, plant and equipment
When using the diminishing value
assets are easily removable or
method, the deduction is calculated
mechanical in nature. Some
as a percentage of the asset’s
common examples that BMT Tax
depreciable balance. This means
Depreciation find include:
the deductions are higher in the
• Floor coverings such as carpet
Alternatively, under the prime cost
and vinyl
method, the deduction for each
• Hot water systems
year is calculated as a percentage
• Blinds
of the cost. If this method is used the deductions are not as high in
One of the most versatile areas of
• Furniture
depreciation is plant and equipment
• Hot water systems, and
deductions.
• Smoke alarms.
property depreciation? Property depreciation is the natural wear and tear of a building and its assets over time. There are two parts of a depreciation claim – the structural component (capital works) and the easily removable or mechanical assets (plant and equipment).
early years and are spread out over time showing a more even claim per financial year.
Before we dive into the details of plant and equipment, what is
earlier years and diminish over time.
Depreciation for plant and How can you claim plant and
equipment assets can be
equipment?
accelerated using the low-value
Plant and equipment deductions are claimed differently to capital works. Capital works are typically depreciated at 2.5 per cent over 40 years, while each plant and equipment asset is depreciated across its effective life using either
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pool. Only assets that cost or are valued less than $1,000 can be placed into the pool. Once allocated, they depreciate at an accelerated rate of 18.75 per cent in the first year, and 37.5 per cent in following years.
