What are fixtures?

Degree of annexation asks how the item is held in place. Joinery cemented into a wall is a fixture, while a display rack simply screwed on may not be. Purpose of annexation asks why it went in: to improve the property itself, or to serve the occupier's trade. A bakery oven built into a flue leans towards fixture, and the same oven on castors is plant and machinery.

Leasehold improvements sit across the line. New partition walls and fixed counters may become fixtures depending on how they are attached and what the lease says. Label every item in the fit-out schedule so the classification of each asset is settled before anyone argues about it.

Classification decides the deduction. Depreciating assets under Division 40 are plant and equipment that are not part of the building, and you claim the decline in value over the effective life using the prime cost or diminishing value method. Freestanding counters and specialist equipment a tenant brings in generally sit here.

Capital works under Division 43 cover structural items and capital improvements to a building, including many built-in fixtures, and are claimed at set annual rates on construction cost. Keep records showing whether the tenant or the landlord installed each item, and separate construction costs from purchase costs, because capital allowances turn on that distinction.

Lenders care about removability and title. Movable items can go on a chattel mortgage, a finance lease or a conditional sale, because the asset holds resale value and the lender can take a clean security interest. Permanent fixtures reduce marketability, so large fit-outs are more often funded by a commercial loan or a property-backed facility.

Goods can stay registrable on the PPSR even when attached, but once an item becomes a fixture it is no longer personal property under the PPSA, so a registration cannot secure it and land law governs instead. Lenders register a financing statement describing the collateral precisely, search the PPSR for earlier registrations, and seek landlord consent or a land-based security where the item is permanent.

Fixtures affect how a business sale is treated. Where a business is sold as a going concern, whether the fixtures are included bears on whether the sale is GST-free. Fixtures sold separately are generally taxable supplies unless an exception applies.

Itemise fixtures and fittings in the sale agreement and its schedules, because vague descriptions are where disputes start. A registered business buying fixtures for its enterprise may be entitled to GST credits, so keep the invoices and the evidence of use. Specialist advice is worth getting on whether a particular sale qualifies as a going concern.