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Depreciation: The shipping containers for hire

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Q: I have a client who purchases and hires shipping containers. The containers eventually get sold to some buyers. My question is, are the shipping containers for hire treated as stock or depreciable assets or neither?

 

A: As the containers are initially used to generate assessable income (from their hire), they are depreciating assets (ITAA 1997s 40-40 and 40-30) and should be capitalised and depreciated (ITAA 1997s 40-25) over their useful life (typically 10 years). Refer to Private Binding Ruling 17306. Although that ruling deals with leasing the containers to non-residents, all the salient technical issues are the same.

Tags: Buy and Sell

Written by Panbo Ye

I help people discover POWERFUL unknowns in Tax Ideas | Wealth Strategies | Retirement Planning | Finance Solutions!

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