Income tax: if a purchase of depreciable plant comprises individual items costing $300 or less each or have an effective life of less than 3 years, can these individual items be depreciated at the rate of 100% in terms of subsection 55(2) of the Income Tax Assessment Act 1936 ?

Yes. Provided that the item costing $300 or less or having an effective life of less than 3 years : (a) is regarded as a whole, (b) is capable of being separately identified, and (c) has a separate function, the item will be depreciated at the rate of 100% under subsection 55(2), if the taxpayer does not nominate a lower rate in terms of subsection 55(8).

The 100% depreciation rate only applies to depreciable plant acquired on or after 1 July 1991. Depreciation at the 100% rate is deductible in the year of income in which the depreciable plant is first used by the taxpayer for the purpose of producing assessable income or is installed ready for use for that purpose.