Thrifty Tax Depreciation Schedule

Plant and Equipment (Division 40)

Division 40 allows property investors to claim depreciation on assets that are easily removable or mechanical in nature, referred to as Division 40 assets. These include items like carpets, air conditioners, and blinds, which experience wear and tear over time.

Deductions on Plant and Equipment

Under Division 40, investors can claim depreciation deductions for the decline in value of qualifying assets used in a rental property. The Australian Taxation Office (ATO) sets effective life schedules for these Division 40 assets, determining how much depreciation can be claimed each year. 

Key points about Division 40 deductions:

  • Deductions are based on the asset’s cost and effective life, as per Division 40 ATO guidelines. 
  • Investors can use either the diminishing value or prime cost method to calculate depreciation. 
  • Div 40 depreciation applies to assets in both residential and commercial properties, provided they meet ATO criteria. 
  • The deductions continue annually until the asset’s value is fully depreciated or it is disposed of.

2017 Depreciation Rule Changes for Residential Property

In May 2017, the government introduced changes affecting how residential property investors claim Division 40 depreciation on second-hand assets. According to the ATO, from 1 July 2017: 

  • Investors can no longer claim depreciation on previously used Division 40 assets in second-hand residential properties. 
  • This restriction applies to assets acquired with a property purchased after 9 May 2017. 
  • New properties and newly installed assets are unaffected and remain fully deductible. 

This change does not apply to: 

  • Commercial properties 
  • Brand-new residential properties 
  • Renovations where new plant and equipment assets are installed 

For more details, you can refer to the ATO’s official guide on depreciation rule changes. 

Plant and Equipment Deductible Items

Here are common Division 40 assets that may be eligible for depreciation deductions:

Residential Properties

  • air-conditioner as a div 40 depreciation assetAir-Conditioning units
  • carpet as division 40 tax depreciationCarpets & floating timber flooring
  • curtain and blinds as a div 40 depreciation assetBlinds & Curtains
  • light as a div 40 depreciation assetLight fittings
  • Thrifty Tax Depreciation SchedulesCeiling fans
  • Thrifty Tax Depreciation SchedulesSmoke Alarm
  • security-camera as a div 40 depreciation assetSecurity systems
  • Thrifty Tax Depreciation SchedulesRangehoods

    • Commercial Properties

  • office as a div 40 depreciation assetOffice furnitures
  • oven as a div 40 depreciation assetCommercial ovens
  • security-camera as a div 40 depreciation assetSecurity systems
  • Thrifty Tax Depreciation SchedulesVentilation systems
  • Thrifty Tax Depreciation SchedulesCommercial-grade appliances
  • Thrifty Tax Depreciation SchedulesShop fit-out items
  • Thrifty Tax Depreciation SchedulesCoffe machines
  • Thrifty Tax Depreciation SchedulesSmoke Alarms

    • Division 40 Frequently Asked Questions(FAQs)

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