Glossary · Australian property
Division 40 (depreciation).
ITAA 1997 division covering depreciation of plant and equipment in investment property such as appliances, carpets, blinds, and A/C units.
Division 40 (ITAA 1997) applies to depreciable assets within an investment property. Items with a limited effective life that wear out (curtains, blinds, carpets, ovens, dishwashers, hot-water systems, A/C units, fans, smoke alarms). Each asset has an ATO-determined effective life.
Depreciation methods: prime cost (straight line) or diminishing value (accelerated). Most investors use diminishing value for higher early-year deductions. Items < $300 individual cost can be claimed in full in year 1.
Since May 2017 budget changes, Division 40 deductions are restricted to plant and equipment the investor purchased themselves (not pre-existing in the property at purchase). For second-hand residential property bought after the change, only items the new owner buys and installs qualify.
Source
ITAA 1997 Div 40; ATO TR 2024/1 (effective life of depreciating assets).
Related terms
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