Depreciation, Labour Expense

[A95]

I've bought a ducted cooling installation kit and hired a plumber to install it.
I paid $3,000.00 for the kit and the plumber charged $1,000.00 for his labour.
I have two invoices, one for the kit the other from the plumber.
I know I can depreciate the cooling system for 10 years as per ATO TR2000/18C7 - Effective Life.
What's the best way to depreciate the labour?

Thanks

A95

[Ross]

A95
Any costs associated with installing an asset ready for use are to be included and depreciated together at the same rate

[A95]

Hi Ross,

Thank you very much

[depreciator]

A95,

The ATO divide a ducted system into 2 things - the ducting and the unit that cools/heats the air.

Ducting is regarded as part of the building i.e. it's depreciable at 2.5%. The ATO's argument is that the ducting won't wear out.

The other bit will wear out and therefore has a shorter effective life.

Yes I know, your invoice won't have this cost broken down. As a rule of thumb, around 40% of the installed cost would be ducting.

And yes, this will reduce the depreciation claimable in the early years. Looking on the brightside, though, you will be claiming the cost for the next 40 years so that's something to look forward to.

Sorry to be a wet blanket.

Scott