Back dating depreciation

[razorback]

Dear Forum,

I am aware that you can claim four years in the past for depreciation on properties. However I wish to ask if you may claim past depreciation on other items such as tools of trade. Ie Professional libraries, work tools etc.

For example. Say I have a medical library worth 3000 and it was purchased over the last four years. Can I claim depreciation (considering the effective lives of course) for those years since buying it and not being aware of the possibility of depreciating such items?

I cant see how this would not be allowed. I appreciate any input.

Steve

[Davidr]

Hi razorback,

The four year limit is not specific to the type of amendment you are making. It is a change to a previous year's tax return (and all that it contains).

So to answer your question, if you have made a mistake (even by omission) and you wish to change an item on a previous tax return, you may, within 4 years.

http://ato.gov.au/individuals/pathway.asp?pc=001/002/009/005&mnu=17848&mfp=001/002&cy=1

Cheers,
David

[razorback]

David,

Thank you for your reply.

What would be the case if for the aforementioned items I didnt earn an income relating to medical services for those years? It still seems reasonable to claim for depreciation incurred on such expenses. This is the first year I have received an income related to medical services, but have acquired a collection of medical texts and tools over 4 years.

Steve

[Jamie]

David,

Thank you for your reply.

What would be the case if for the aforementioned items I didnt earn an income relating to medical services for those years? It still seems reasonable to claim for depreciation incurred on such expenses. This is the first year I have received an income related to medical services, but have acquired a collection of medical texts and tools over 4 years.

Steve
Hi Steve,

Without being an expert in this area, Id say you might have trouble claiming the depreciation on these items in this case. I know in other areas with business related expenses such as travel and self education, there has to be a nexus between the incurring of the cost and the income earned from the activity.

In your case, during the time youve owned the tools/texts you might have trouble proving that they were purchased to earn an income, as youve only just started earning an income related to their purchase. You were using the tools and texts to as a means to a future income, but not a current one (at the time). This is the nexus the ATO uses in assessing work related travel and self education expenses, so Im assuming it might be the case with depreciation as well.

As always, Im happy to be proven wrong by someone more knowledgeable than me on this though:D

All the best,

Jamie.