Property tax allowances or tax depreciation is a special tax deduction provided under the Income Tax Assessment Act 1997 (ITAA 1997) and provides owners of income producing properties an opportunity to reduce their assessable income. There are two types of depreciable allowances as set out in the ITAA (summarised here but described in detail in another section of the website), the first is known as Capital Work Deductions and is outlined in Division 43 of the Act. This type of allowance relates to the actual structure
of a building and the eligibility of Div 43 allowances is dependent on the age of the property. As part of preparing a tax depreciation schedule C2 Developments determines the eligibility of Capital Works Deductions by ascertaining when the property was constructed and claiming a deduction accordingly. The second type of depreciable allowances are called Depreciating Assets (formerly known as 'Plant') and is set out under Division 40
of the ITAA. This type of allowance pertains to the fixtures and fittings included as part of the construction of a building. These type of assets can be claimed as depreciation regardless of the age of a property and can in fact be re-valued as at the time of the property's acquisition.
