What is Division 43?

What is division 43?

Tuan Duong

Also known as Capital Works | Building Write-Off | Building Allowance.

Division 43 Capital works refer to the items that make up the building and those that are fixed to the building.

Here are some items you could depreciate part of the building:

Built-in wardrobesBuilt-in workstations
Toilets and vanitiesCar parking space
Basins and sinkGlass partitions
Concrete slabKitchenette
Retaining walls and fencesSteel-framing of warehouse
Timber framing

The historical construction costs include fees for preliminary items such as design fees, engineering and building approval costs.  Where actual costs are not known, a quantity surveyor has estimated this amount by determining the appropriate costs for the building/structural improvement of the asset as at the date it was constructed.

The percentage rate at which the building depreciates is dependent upon when construction commenced and the intended use of the building for i.e. commercial, manufacturing or residential purposes. This percentage will either be 2.5% or 4% if it qualifies for depreciation.

Does my building qualify for (Division 43) capital works tax deductions?

Capital works refer to the items that make up the building and those that are fixed to the building.

  1. When was your building built?
  2. What type of building do you own or lease?

Using these two key pieces of information, we can deduce approximately how much your brand-new or second-hand property can claim on construction costs.

Duo Tax has developed an easy guide to refer to check whether your property qualifies for Capital Works.

Capital Works Depreciation Rate

(Based on Construction Commencement Year)

Construction Year 21 Aug 1979 20 July 1982 22 Aug 1984 18 July 1985 16 Sept 1987 27 Feb 1992 to Present
Structural Improvements 2.5%
Residential 4% 2.5%
Offices, Warehouses & other Commercial 2.5% 4% 2.5%
Manufacturing 2.5% 4% 2.5% 4%
Hotels, Motels & Guest Houses 2.5% 4% 2.5% 4%
Key: 2.5% 4%

When it comes to claiming depreciation on an investment property, there is also division 40 (also known as plant & equipment, depreciating assets or capital allowances). Compare them here.

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Disclaimer: Please note that every effort has been made to ensure that the information provided in this guide is accurate. You should note, however, that the information is intended as a guide only, providing an overview of general information available to property investors. This guide is not intended to be an exhaustive source of information and should not be seen to constitute legal or tax advice. You should, where necessary, seek a second professional opinion for any legal or tax issues raised in your investing affairs.

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Tuan Duong

Tuan is an award winning Quantity Surveyor and leads Duo Tax Quantity Surveyors – Australia’s fastest growing provider of Tax Depreciation.

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