Plant & Equipment (Division 40)
Tax & Deductions
Removable assets within a property, such as carpets, blinds, and appliances, that can be depreciated for tax purposes.
Full Explanation
Division 40 assets are items that are not permanently fixed to the building structure and have a limited effective life as determined by the ATO. Each item is depreciated individually using either the diminishing value or prime cost method. Since 9 May 2017, second-hand plant and equipment in residential properties can only be claimed by the investor who first used the asset.
Example
A new split-system air conditioner costing $2,500 has a 10-year effective life, allowing you to claim $250 per year using the prime cost method.
Frequently Asked Questions
What is the difference between diminishing value and prime cost?
Diminishing value gives larger deductions in the early years and smaller ones later. Prime cost spreads the deduction evenly over the asset's effective life. Most investors choose diminishing value for the upfront tax benefit.
Can I claim second-hand plant and equipment?
Only if you are the first entity to use the asset in the property, or if you purchased the property before 9 May 2017. Otherwise, second-hand plant and equipment in residential properties is not deductible.