Australia's denial of depreciation deductions for second-hand assets used in residential rental properties: rationales appear obscure
Source: Australian Tax Forum Journal Article
Published Date: 1 Jul 2022
From July 2017, decline in value deductions (depreciation) will not be available for second-hand assets deployed in residential rental properties and nor will such deployment followed by disposal of the asset be subject to the balancing adjustment aspect of the depreciating asset regime. Instead, the denied deductions and denied balancing adjustment amount may be recognised as a capital loss under the capital gains tax regime. Amongst other claims, official statements justifying the reform point to taxpayers refreshing the cost base of second-hand assets deployed to the rental property and successive owners of an asset claiming depreciation in excess of value. This article tests these rationales and others provided for the reform against the substantive income tax rules. The conclusion of the article is that the statements concerning refreshing cost bases, etc, cannot be correct as a matter of substantive income tax law; although they are very likely correct in terms of taxpayers illegally stepping-up cost bases.
Sorry, this is subscriber only content.
To gain access to this material and much more - Subscribe Now.
(Note: Members can access Taxation in Australia journal articles without a Tax Knowledge Exchange subscription - please log in to access).
Already a Subscriber? Login now
Already a Subscriber? Login now
Details
- Published By: Dale Boccabella CTA
- Published On:1 Jul 2022
The material is copyright. Apart any fair dealing for the purpose of private study, research criticism or review, as permitted under the copyright Act, no part may be reproduced by any process without written permission from The Tax Institute.
Unless expressly stated, opinions are not that of The Tax Institute, which accepts no responsibility for the accuracy of any of the information contained within it.
The Tax Institute
(ABN 45 008 392 372 (PRV14016))
("TTI")
The Tax Institute is a Recognised Tax Agent Association (RTAA) under the Tax Agent Services Regulations 2009.
Copyright Statement
All materials provided on this site are protected by copyright and are owned by or licensed to TTI.
Except as expressly permitted by TTI or the copyright owner, any person or company who uses this site must not use, reproduce, redistribute, retransmit, publish or otherwise transfer, or commercially exploit, the materials or any information, software or other content, in whole or in part, which is available through this site.
Tags
Share this page