Light fittings - worthwhile adding plug for maintenance and depreciation?

Discussion in 'Accounting & Tax' started by Mark F, 14th May, 2020.

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  1. Mark F

    Mark F Well-Known Member

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    In renovating my partners current IP project which was a deceased estate that had little/no maintenance for 20+ years I have added a plug and lead to all my new light fittings, both down lights and oysters, to minimise maintenance costs - no electrician call out costs etc. I also assume this makes the lights depreciable as they no longer meet the "hard wired" definition. Am I correct in this assumption?
     
  2. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    There is no requirement for it to be hard wired to be or not be building works. If it did hardwired ovens would no longer be Div 40 but would be Div 43 expenditure.

    Mods to lighting may be an insurance issue. And fire hazard. Fire Brigade would note the plugs etc.
     
    Last edited: 14th May, 2020
  3. Mark F

    Mark F Well-Known Member

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    I'm a bit confused. When I look at the ATO's depreciation list Rental properties 2019 I see:
    lights: fittings (excluding hardwired) - 5 year life (Div 40)
    lights: fittings, hardwired - Capital works (Div 43)

    Many led down lights come with cord and plug as do many fans. I don't see an insurance issue especially as they are using low wattage led bulbs.
     
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  4. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    So if it's in the ruling you can follow that.

    Of course buying plug fitting lights, having additional wirin by a sparkie vs simple installs as hardwired etc adds a much higher cost. To bring forward depreciation. You may be overthinking this minor element of the property. So if the cost was 6k vs 2k for standard lights you outlay 4k more to enhance deductions a year later by $600. And a extra refund of $200 or less.

    It's not at all a realistic proposition based on cashflows. Deductions are regressive. Depreciation deductions even more regressive. We are talking a deduction at 10% of higher cost vs 2.5% and at a marginal tax rate.
     
  5. Sean Connolly

    Sean Connolly Member

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    Paul I think you over complicated the answer to Marks question.
    To answer your question Mark, yes, by doing what you did with the light fittings they are now classified as removable and can be depreciated as such.
     
  6. Mark F

    Mark F Well-Known Member

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    Thanks for your replies Paul and Sean. The actual cost of adding the plug and lead is under $10 per unit for plug, socket and a metre of flex. The sparkie takes under 5 minutes extra per light and actually quite likes it as he is not faffing about at the top of a ladder trying to fit cable into the light fitting.
     
  7. Sean Connolly

    Sean Connolly Member

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    It is common practice for electricians to install a plug near where the light fittings will be installed, I see it a lot in strata buildings, as they are being constructed. My electrician did it for my kitchen during my renovation and I agree with you, it makes it a lot easier to replace a light fitting when the need arises.
     
  8. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    They could be written of in instances where its a individual light and installed cost is under $300. Dont assume. Tax law is about more than yes or no. Heaps of lights will meet that definition...But not doing a whole house at once.