A tax deduction is allowed under Div 43 for the capital cost of constructing capital works to be written-off.
Such Capital works are:
Deductions for capital works include deductions for eligible capital work on extensions, alterations or improvements to a building or structural improvement.
Structural improvements include sealed roads, driveways and car parks, bridges, pipelines, fences, concrete or rock dams and artificial sport fields.
To complete the Capital Works worksheet
| Field | Description |
|---|
| Asset number | The number you choose to assign to this asset and the number by which the asset and its details will be recognised and stored by Tax. This can be any number between 1 and 99999. |
| Description | This field allows for a description up to 36 characters for the name of the building or structural improvement expense. |
| Integrate | Integration is available from this worksheet to Rental Schedules (ren and rep), the Non-primary production Business income schedules (b) and Primary production income schedules (c). Click [F10] to choose the relevant schedule to which the building deduction write-off for the year should be integrated. Refer to Capital works deduction integration. |
| Construction Commenced | Enter the date of construction of the building or structural improvement commenced. The permitted date range is detailed on screen. |
| Write-off Start Date | Enter the date that write-off is to commence. This date must be in the current income year as detailed on screen. |
| Construction Cost | Enter the cost of construction. |
| Opening written-down value | This amount must not be more than the construction cost. |
| Write-off rate % | Select between the two allowed rates (2.500 or 4.000%). |
| Asset disposal date | Enter the date of disposal of the building. The allowable date range is shown on screen. |
| Closing written-down value | Tax calculates this amount from the opening written down value and the write-off rate% selected. |
| Amount for write-off | Tax calculates this amount using (Construction cost * the Write-off %) |
| Accumulated write-off | The Accumulated write-off collects the capital works deductions claimed over the life of the property. This is to assist with recouping capital works deductions on the sale of a property. |
| Return total | Tax sums the total amount of building deductions for all depreciated assets for this return. The Return Total is the same on all Capital Works Expenses worksheets attached to a return. |
Additional notes on Capital works deductions
Non-residential: Where construction commenced after 26 February, 1992, the costs were written off at the rate of 2.5% p.a., except where the building was used for 'eligible industrial activities' (MTG 20-490), in which case the rate of write-off is 4% (this higher rate does not apply to structural improvements).
Income producing structural improvements from 27/02/92 are 2.5%
The short-term traveller accommodation deduction is available under Div 43
Where the construction is pursuant to a 'qualifying previous commitment' the rate is 4%.
For the current ATO rate information based on ‘date construction commenced’ click this link to the ATO website.
