The ATO outlines two categories that make up depreciation deductions – plant and equipment (division 40) and capital works (division 43).

What is plant and equipment?

Plant and equipment (division 40) assets are items which are easily removable or mechanical in nature from a residential investment property or commercial building. Property owners can claim depreciation for the wear and tear of these assets.

The asset’s condition, quality and effective life all determine the allowances available.

What is deductible under plant and equipment?

Plant and equipment deductions cover items such as:

Residential property

  • Air-conditioning units
  • Blinds and curtains
  • Hot water systems, heaters, solar panels
  • Security systems
  • Light fittings
  • Swimming pool filtration and cleaning systems
Blinds solid BMT blue
CCTV solid BMT blue
Light ceiling-solid BMT blue
Couch solid BMT blue

Commercial property

  • Carpet and flooring
  • Desks
  • Blinds
  • Shelving
  • Manufacturing equipment
  • Commercial ovens
Chair office solid BMT blue
Cash register solid BMT blue
Oven solid BMT blue
Headset solid BMT blue

Plant and equipment deductions

Plant and equipment assets are identified through tax legislation as assets that can reasonably be expected to decline in value or depreciate over the time they’re used.

Plant and equipment depreciation rates are calculated based on an asset’s effective life which is set by the tax commissioner and updated regularly through tax rulings.

The depreciation rates and effective lives of all ATO specified plant and equipment (division 40) assets differ by asset and even by industry. The ATO recognises that plant and equipment items will wear out more quickly than the building itself and likely need replacing sooner.

Find out the effective life and depreciation rate for any residential or commercial plant and equipment asset with BMT Rate Finder.

2017 changes to residential depreciation rules

Depreciation legislation was amended in 2017. The change meant that depreciation could not be claimed for second-hand plant and equipment assets.

Residential owners can still claim for any new plant and equipment assets added to the property such as an oven or dishwasher, as well as the full capital works deductions which make up 85 – 90% of the total claim. Read more about the current depreciation legislation.

A BMT Tax Depreciation Schedule will ensure you’re maximising the depreciation deductions for both plant and equipment and capital works for your property. The schedule covers all deductions available over the lifetime of a property and is 100 per cent tax deductible.

BMT will always assess each property and make sure there is a substantial claim. If we can’t find double our fee worth of deductions in the first full financial year claim, there will be no charge for our services.

Plant and equipment (division 40) FAQs

Plant and equipment (division 40) FAQs

How is the capital works deduction different to plant and equipment?

The capital works deduction relates to the building structure and assets permanently fixed to the building. It is a fixed amount that can be claimed each year on all applicable building structures for up to forty years. Plant and equipment items, or the building’s removable fixtures and fittings, have varying effective lives and therefore can be depreciated at an increased rate which varies depending on the asset.

All plant and equipment items have individual effective lives specified by the ATO.

Our tax depreciation schedules show each item’s:

  • Estimated cost
  • Effective life
  • Depreciable value
  • Contribution to the depreciation total per financial year

Individual costs for the original building structure, including capital improvements, are all depreciated at the same rate.

We will conduct the necessary searches required to accurately determine the age of your building. These can include historical council searches regarding lodged development applications as well as occupancy certificates and certified final inspections. We look at things on site, too, such as materials and age of equipment.

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Find out more about tax depreciation