Topics on tax issues for lessors and lessees (5)



TAX TIP – Items used to create atmosphere or ambience

In certain circumstances, the ATO considers an item used to create a particular atmosphere or ambience in a business to be plant, where the function of the item is so related to that business to warrant the item coming within the ordinary meaning of plant for these purposes.

This applies to an item used to create atmosphere or ambience for premises including a hotel, restaurant, café, licensed club, motel or retail shopping business, where the creation of atmosphere or ambience is intended to attract customers and forms a definable element in the services provided by the business for which its customers are prepared to pay. This will not, however, be the case for premises that provide limited or no dining facilities for customers (e.g., a takeaway food shop). Refer to paragraphs 44 to 52 of TR 2007/9.

In addition to assets that come within the ordinary meaning of ‘plant’, the meaning of this term is extended under S.45-40 to also include (among other things) the following:

  • Articles (e.g., carpet), regardless of whether they have been attached to premises. Note, however, that an item is not considered an article if it forms part of premises or if it is a structure erected or built on, or into, land. Refer to paragraphs 13 to 16 of TR 2007/9.


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Written by Panbo Ye

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

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