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11 May 06 Deductibility of depreciating asset purchased for a specific client project - TD 2006/33

This final Taxation Determination was issued on 10 May 2006. It was not previously released in draft form. Its full title is "Income tax: is the cost of a depreciating asset purchased by a taxpayer to assist them undertake a specific client project immediately deductible under s 8-1 or written off over the effective life of the asset under s 40-25 of ITAA 1997 if the taxpayer continues to hold the asset after the project ends?"

The answer given is: "The cost of the depreciating asset is not immediately deductible under s 8-1 of ITAA 1997. It is written off as a deduction for decline in value over the effective life of the asset under s 40-25 of the ITAA 1997."

This Ruling applies from 1 July 2001.

As a result of the issue of TD 2006/33, TD 93/189 (Income tax: can the cost of plant purchased for a specific project, and fully charged to the client, but which is still held after that project was completed and able to be used again, be treated as fully deductible under s 51(1) or under the depreciation provisions of the ITAA 1936?) has been withdrawn with effect from 10 May 2006.

For a copy of TD 2006/33, go here

For a copy of TD 93/189W, go here

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