Deductibility of replacing pool filtration system parts

Discussion in 'Accounting & Tax' started by Rex, 19th May, 2020.

Join Australia's most dynamic and respected property investment community
  1. Rex

    Rex Well-Known Member

    Joined:
    12th Feb, 2018
    Posts:
    813
    Location:
    Perth
    If I am to replace the ailing chlorinator of my IP's swimming pool filtration system, is this considered a 'repair' to the filtration system (immediately deductible) or a replacement/improvement of the individual unit (depreciable)? If the former, I might hurry up and get it done this financial year...
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

    Joined:
    9th Jun, 2006
    Posts:
    30,887
    Location:
    Australia wide
    sounds like it might be a repair as long as it is same for same.
     
    Rex likes this.
  3. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    15,146
    Location:
    Sydney
    Replacing the chlorinator is not a repair of the chlorinotor. Arguable that this is a element of the pool. Hence deductible. Seek ATO opinion since a chlorinator is a Div 40 asset. But is the pool a structure and Div43. But is chlorinator a element of a chlorination and water pump system?
     
  4. Rex

    Rex Well-Known Member

    Joined:
    12th Feb, 2018
    Posts:
    813
    Location:
    Perth
    Yes the chlorinator is an element of the filtration / pump system. It controls the pump run times and also adds chlorine to the water, so an integral part of the filtration system. So I (a layman with no tax expertise) thought it might be considered as replacing a part of (a repair to) the broader filtration system, instead of replacement of an individual depreciating asset.
     
  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

    Joined:
    9th Jun, 2006
    Posts:
    30,887
    Location:
    Australia wide
    How much is it?
     
  6. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    15,146
    Location:
    Sydney
    More than $300. The asset is listed as a Div 40 asset eg Chlorinator. Hence the component must be depreciated, sorry. Its not a "part" of the pool. (Div 43) which is a structural asset.

    It has a effective life of 10% years so at 20% DVM or 10% Prime Cost basis.
     
  7. Rex

    Rex Well-Known Member

    Joined:
    12th Feb, 2018
    Posts:
    813
    Location:
    Perth
    Thanks for your help. Hooray, more complexity.

    It's looking like it will be a bit less than $1,000 to replace - can this get added to a low value pool (depreciable over 4 years)? Is that a thing for individuals, or only businesses?
     
  8. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    15,146
    Location:
    Sydney
    Less than $1k

    If you are using pooling. It doesnt write it off over 4 years. After 4 years the value remainining in the pool (assuming its the sole asset and cost $999) would still be $200. After 5 years its $125. If the chlorinator was replaced again at that time you cant write it off when its pooled. Using DVM would leave far more of value but it could be written off ($410) if its effective life ends. Pooling isnt all its cracked up to be. Its a simple method that makes it more complicated.

    Page 25 https://www.ato.gov.au/uploadedFiles/Content/IND/downloads/Rental-properties-2019.pdf
     
    Rex likes this.