Understanding the 'Carrying on a Business' Exclusion
Simply put, when the depreciation restriction kicks in, it stops you from claiming depreciation deductions for assets that would normally decrease in value over time. This restriction applies to assets valued at $300 or less, which could be written off completely in the year of purchase under section 40-80(2). It also applies to assets costing less than $1,000 that could otherwise be depreciated as part of a low-value pool.
However, if you're using residential premises for providing accommodation as part of your business activities, the depreciation restriction won't affect you. This means if you're running a business such as property investment (renting out properties), offering holiday apartments, or even managing a hostel or boarding house, you can still claim depreciation deductions.
In some cases, it's obvious that the income you're making from the premises is part of your business operations. This includes situations like running a hotel, boarding house, retirement village, or aged care facility.
If you have any questions about this, feel free to reach out to Tax Ideas Accountants & Advisers at +61 2 83181545. Alternatively, you can schedule an appointment using our live calendar.