Written byFittings are items in a property that are not part of the permanent structure and can be removed without substantial damage, whether freestanding or only lightly attached.
Also known as: fitting
Key points
- The line between fittings and fixtures is how firmly the item is attached: bolted, glued or hardwired items lean towards fixtures.
- Fittings are usually depreciating assets under Division 40, so you claim depreciation over the item's effective life.
- Items used in carrying on a business, such as commercial kitchen gear, are more likely to count as plant and machinery.
- Keep invoices, installation details and photographs: the ATO looks at all the facts, and no single test decides classification.
Fittings, fixtures and plant
Fittings are usually removable without major damage: curtains on a track, a freestanding wardrobe, a plug-in oven, a portable air conditioner. Fixtures are annexed to the building and become part of the structure, such as a built-in oven sealed into cabinetry or a hardwired light. Plant and equipment is used in carrying on a business and sits apart from the building fabric, such as commercial kitchen gear or manufacturing machinery.
The label matters because the tax treatment follows it. A depreciating asset declines in value under Division 40, while capital works are claimed under Division 43 at set rates. Disposal rules differ as well, and getting the classification wrong can bring an ATO adjustment.
The tests that decide classification
Degree of annexation comes first: is the item bolted, glued, hardwired or plumbed in, or is it simply resting in place? A dishwasher screwed into cabinetry and connected to plumbing is more annexed than a portable one.
Purpose and function ask whether the item is meant to be a permanent part of how the building works, or a separate asset providing a service. Intention looks at what the person who attached it set out to do, evidenced by contracts, installation invoices and builder's specifications. Business use pulls the other way: items used mainly in carrying on a business often count as plant even when attached. No single test settles it.
Claiming and disposing of fittings
Under Division 40 you deduct the decline in value over the effective life, using either the prime cost or the diminishing value method. The ATO publishes effective lives, and where none fits you estimate a reasonable one and keep the evidence. Small business concessions may allow an immediate write-off of low-cost items, or pooling them for simpler and faster deductions, subject to the current thresholds.
When you sell or remove a depreciating asset, work out a balancing adjustment: proceeds above the written down value are assessable, proceeds below it are deductible. Fixtures that form part of capital works affect the property's cost base for capital gains tax instead.
Records the ATO expects
Keep purchase invoices and receipts with itemised costs, installation invoices or builder contracts showing how each item was attached, and photographs before, during and after installation. A quantity surveyor report is useful where costs need apportioning between capital works and fittings.
An asset register holding effective life, method, purchase date and disposal date makes a claim defensible. Records are generally kept for at least five years after you lodge, and longer where they relate to capital gains. For borderline items or large amounts, a tax agent or quantity surveyor earns their fee.
Not to be confused with
- Fixtures
- a fixture is annexed to the building and forms part of the structure
Frequently asked questions
Are curtains fittings or fixtures?
Curtains on removable tracks are commonly treated as fittings, which means a depreciating asset. Pelmets and permanently fixed curtain systems are more likely to be fixtures and part of capital works. How the item is attached decides it, and in a residential rental individual investors generally claim decline in value only on assets acquired new.
Is carpet a fitting or part of the building?
Glued-down carpet that becomes part of the floor may be treated as a capital component of the building. Loose or tack-fixed carpet is usually a depreciating asset you claim over its effective life. For a residential rental, individual investors generally claim decline in value only on assets acquired new, so check the ATO's rules.
Is a split-system air conditioner a fitting or plant?
A portable or loosely fixed split system is usually a fitting and depreciated as an asset. A ducted system integrated into the building is more likely a fixture, or plant, depending on how it is annexed and how it is used.
Can I claim a deduction for a dishwasher in a rental property?
A freestanding or plug-in dishwasher is generally a depreciating asset claimed over its effective life, while a built-in one sealed into cabinetry may be a fixture. In a residential rental, individual investors generally claim decline in value only on assets acquired new, so second-hand assets that came with the property do not qualify.
What happens to the depreciation claim when I sell the property?
For depreciating assets you may need a balancing adjustment, comparing the sale proceeds against the asset's adjusted tax value. Fixtures that form part of capital works affect the property's cost base for capital gains tax rather than triggering a Division 40 adjustment.
Related terms
Broader term: Asset
Fixtures
Fixtures are items attached to land or a building so firmly that they are treated as part of the real property rather than as movable chattels.
Read definitionDepreciation
Depreciation is the fall in an asset's value over time, spread across the years the asset is used so the cost can be claimed as a tax deduction.
Read definitionAsset
An asset is anything a business or person owns or controls that is expected to produce future economic benefit, such as cash, equipment, vehicles, property or receivables.
Read definitionPlant and machinery
Plant and machinery means the tangible assets a business uses to make, move, process or service things, such as excavators, forklifts and CNC machines.
Read definitionWrite-off
A write-off is an accounting entry that removes an asset or unpaid customer invoice from the books because it no longer has recoverable value, recording the loss against profit.
Read definitionAsset register
An asset register is a structured record of the tangible and intangible assets a business owns, controls or leases, tracking each item's location, value, depreciation and disposal in one place.
Read definitionGo deeper
Sources
This article is general information only and is not financial advice.