Issue
Is a depreciation deduction available under section 42-15 of the Income Tax Assessment Act 1997 (ITAA 1997) for an outdoor television antenna attached to a rental property?
Decision
No, a depreciation deduction is not available under section 42-15 of the ITAA 1997 because an outdoor television antenna attached to a rental property is not considered to be a unit of plant.
Facts
The television antenna is attached to a property that is available for rent at all times. It is clamped around a mast which is screwed onto the side of the building.
An outdoor television antenna is generally covered under a building rather than a contents insurance policy.
Reasons for Decision
Section 42-15 of ITAA 1997 states that you can deduct for an income year an amount for the depreciation of a unit of plant that you own and use to produce assessable income or is installed ready to use for that purpose.
Plant is defined in section 42-18 of the ITAA 1997 to include articles and machinery. The television antenna is not considered to be an article or machinery. Its nature and degree of affixation to the building and its treatment for insurance purposes, supports the view that it is not an article. On a functional analysis, it could not be said that its operation is sufficiently mechanical in nature for it to be accepted as machinery.
A primary factor in determining whether a particular item is a unit of plant is its function. Mahoney J. in Macquarie Worsteds Pty Ltd v. FC of T 74 ATC 4121 at 4125; (1974) 4 ATR 334 at 338 said: "To be plant, a thing of the kind here in question must be more than mere setting for the taxpayer's operations".
It is considered that the antenna provides no more than the setting or environment within which income-producing activities are conducted. A deduction under Division 43 of the ITAA 1997 for capital works expenditure is however, available at the rate of 2.5%.