Yaniuk and Commissioner of Taxation
[2001] AATA 851
•11 October 2001
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2001] AATA 851
ADMINISTRATIVE APPEALS TRIBUNAL )
) No NS2000/82
SITTING AS THE SMALL TAXATION
CLAIMS TRIBUNAL
Re
DARRYL WILLIAM YANIUK
Applicant
And
COMMISSIONER OF TAXATION
Respondent
DECISION
Tribunal
Ms J A Shead, Member
Date 11 October 2001
Place Sydney
Decision
That part of the decision under review regarding the sewerage treatment works is set aside and remitted back to the ATO, with the direction that the sewerage treatment works is not deductible at all, and that part of the decision under review concerning the building and mechanical installation is affirmed.
……………………………….
J A Shead
Member
CATCHWORDS
TAXATION – income tax – deduction – sewerage treatment works – building and mechanical installation – whether a deduction rate of 2.5 percent or the higher rate of 4 percent for capital works of construction cost was allowable in respect of a building that was the Applicant’s rental property – whether the Applicant’s property is an “apartment building” or “hotel building” – definition of “any entity” – whether depreciation at 20 percent was allowable in respect of sewerage treatment works and mechanical installation – whether Applicant has ownership or quasi-ownership of sewerage treatment works – whether split system air-conditioners are part of Applicant’s property – whether split system air-conditioners are deductible as part of building – definitions of “setting” and “plant”
Income Tax Assessment Act 1997 – ss 43-10, 43-25, 43-90, 43-95, 43-115, 43-120, 43-140, 43-145, 995-1
Wangaratta Woollen Mills Ltd v Federal Commissioner of Taxation (1969) 119 CLR 1
Taxation Case Q8 (1964) 15 TBRD 32
AAT Case 11/97; No 11,655 (1997) 97 ATC 173
REASONS FOR DECISION
Ms J A Shead, Member 1. The decision under review before the Administrative Appeal Tribunal, sitting as the Small Taxation Claims Tribunal (“the Tribunal”), was a decision made by the Commissioner of Taxation (“the Respondent”) on 31 July 2000, which refused an objection by Darryl William Yaniuk, (“the Applicant”) made on 17 April 2000 against an amended assessment dated 28 April 1999. This assessment disallowed, amongst other things, a 4 percent deduction claimed for capital works for a building and 20 percent depreciation allowance for sewerage treatment works and air-conditioning, during the tax year ending 30 June 1998 (“the 1998 year").
2. The Applicant attended the hearing and gave oral evidence. He was represented by Mr A Chan CPA of Chan & Co. Mr S Neill, of the Australian Taxation Office (“the ATO”), represented the Respondent.
3. The Tribunal had the documents filed pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 in evidence, numbered T1 to T16 (“the T-documents”) comprising folios 1 to 60. The following exhibits were also tendered to the Tribunal:
Exhibit
Description
Date
A1
Cypress Lakes Resort Map
A2
Photographs of Cypress Lakes Resort & Lots 603, 604, 605 and 606
A3
Photographs of air conditioning unit Lot 604
A4
Lease (in blank) wherein Cypress Lakes Group Pty Limited (“Cypress Lakes”) is the tenant
A5
Cypress Lakes quantity surveyor’s advice regarding mechanical installation for split system air conditioners
5 December 2000
R1
Chan & Co letter to the ATO
7 February 2001
R2
Applicant’s written submissions
issues before the tribunal
4. The issues to be determined by the Tribunal are:
(a)whether a deduction rate of 2.5 percent or the higher rate of 4 percent for capital works of construction cost was allowable in respect of a building that was the Applicant’s rental property Lot 604 in Cypress Lakes Resort, under Division 43 of the Income Tax Assessment Act 1997; and
(b)whether depreciation at 20 percent was allowable in respect of sewerage treatment works and mechanical installation, that is split system air conditioning unit, as plant, under Division 42 of the Income Tax Assessment Act 1997.
legislation
5. The sections of the Income Tax Assessment Act 1997 (“ITAA 1997”) relevant to the issues are sections 43-10, 43-25, 43-90, 43-95, 43-115, 43-120, 43-140, 43-145, 995-1, as follows:
“43-10 Deductions for capital works
(1) You can deduct an amount for capital works for an income year.
(2) You can only deduct the amount if:
(a) the capital works have a *construction expenditure area; and
(b) there is a *pool of construction expenditure for that area; and
(c) you use *your area in the income year in the way set out in Table 43-140 (Current year use).
Note 1: The deduction is limited to capital works to which this Division applies, see section 43-20.
Note 2: Amongst other things, the definition of your area ensures that only owners and certain lessees of capital works, and certain holders of quasi-ownership rights over land on which capital works are constructed, can deduct an amount under this Division.
…
43-25 Rate of deduction
(1) For capital works begun after 26 February 1992, there is a basic entitlement to a rate of 2.5% for parts used as described in Table 43-140 (Current year use). The rate increases to 4% for parts used as described in Table 43-145 (Use in the 4 percent manner).
(2) For capital works begun before 27 February 1992 and used as described in Table 43-140, the rate is:
(a) 4% if the capital works were begun after 21 August 1984 and before 16 September 1987; or
(b) 2.5% in any other case.
Note: Section 43-80 explains when capital works begin.
…
43-95 Meaning of ‘hotel building’ and ‘apartment building’
(1) A ‘hotel building’ is:
(a) a building begun after 21 August 1979 and before 18 July 1985, or after 26 February 1992 and before 1 July 1997, that, at the time of completion of its construction, was intended to be used in the way referred to in Column 3 of Table 43-90 (intended use at completion) for a hotel building; or
(b) a building begun after 30 June 1997 and that, in the income year, is used in the way referred to in Column 3 (time period 2) of Table 43-145 (use in the 4% manner) for a hotel building.
(2) An ‘apartment building’ is:
(a) a building begun after 21 August 1979 and before 18 July 1985, or after 26 February 1992 and before 1 July 1997, that, at the time of completion of its construction, was intended to be used in the way referred to in Column 3 of Table 43-90 for an apartment building; or
(b) a building begun after 30 June 1997 and that, in the income year, is used in the way referred to in Column 3 (time period 2) of Table 43-145 for an apartment building.
…
43-115 Your area and your construction expenditure—owners
(1) ‘Your area’ is the part of the *construction expenditure area that you own.
(2) ‘Your construction expenditure’ is the portion of the *pool of construction expenditure that is attributable to your area.
43-120 Your area and your construction expenditure—lessees and quasi-ownership right holders
Own expenditure
(1) ‘Your area’ is the part of the *construction expenditure area that you lease, or hold under a *quasi-ownership right over land granted by an *exempt Australian government agency or an *exempt foreign government agency, and that:
(a) is attributable to a *pool of construction expenditure that you incurred; and
(b) you have continuously leased or held since the construction was completed.
Earlier lessees' or holders' expenditure
(2) ‘Your area’ is the part of the *construction expenditure area that you lease, or hold under a *quasi-ownership right over land granted by an *exempt Australian government agency or an *exempt foreign government agency, and that:
(a) is attributable to a *pool of construction expenditure incurred by another lessee or holder of a quasi-ownership right over land; and
(b) has been continuously leased or held since the construction was completed by the lessee or holder who incurred the expenditure or an assignee of that lessee's lease or that holder's quasi-ownership right over land.
(3) ‘Your construction expenditure’ is the portion of the *pool of construction expenditure that is attributable to your area.
…
43-90 Table of intended use at time of completion of construction
Column 1
Date capital works beginColumn 2
Type of capital worksColumn 3
Intended use on completionTime period 1:
22/8/79 to 19/7/82 (inclusive)Hotel building
For use by any entity wholly or mainly to operate a hotel, motel or guest house that has at least 10 bedrooms that are for use wholly or mainly to provide short-term accommodation for travellers.
Apartment building
The building consisted of:
(a) at least 10 apartments, units or flats each of which was for use wholly or mainly to provide short-term accommodation for travellers; or
(b) at least 10 apartments, units or flats each of which was for use for that purpose and facilities that are wholly or mainly for use in association with providing short-term accommodation for travellers in those apartments, units or flats.Time period 2:
20/7/82 to 17/7/85 (inclusive)Hotel building
As for time period 1.
Apartment building
As for time period 1.
Non-residential building
For:
(a) use by the entity that incurred the expenditure for the *purpose of producing assessable income or exempt income; or
(b) disposal by that entity to another entity for use by the other entity for the purpose of producing assessable income or exempt income.Time period 3:
18/7/85 to 20/11/87 (inclusive)Any building
For:
(a) use by the entity that incurred the expenditure for the *purpose of producing assessable income or exempt income; or
(b) disposal by that entity to another entity for use by the other entity for the purpose of producing assessable income or exempt income; or
(c) use by an entity wholly or mainly for, or in association with, residential accommodation.Time period 4:
21/11/87 to 26/2/92 (inclusive)Any building
For:
(a) use by the entity that incurred the expenditure for the *purpose of producing assessable income or exempt income; or
(b) disposal by that entity to another entity for use by the other entity for the purpose of producing assessable income or exempt income; or
(c) use by an entity wholly or mainly for, or in association with, residential accommodation; or
(d) use by the entity that incurred the expenditure to carry on *research and development activities by or for that entity, or for disposal by that entity to another entity for use by the other entity for carrying on research and development activities by or for the other entity.Time period 5:
27/2/92 to 18/8/92 (inclusive)Hotel building
As for time period 1.
Apartment building
As for time period 1.
Other buildings
As for any building in time period 4.
Structural improvements
As for any building in time period 4.
Time period 6:
19/8/92 to 30/6/97 (inclusive)Hotel building
As for time period 1.
Apartment building
As for time period 1.
Other buildings
As for any building in time period 4.
Structural improvements
As for any building in time period 4.
Environment protection earthworks
As for any building in time period 4.
Note: There are special rules that explain or qualify the uses described in Column 3 of this Table. These rules are set out in Subdivision 43-E (sections 43-155 to 43-195). For example:
* Research and development activities must be carried on in connection with a business carried on for the purpose of producing assessable income, see section 43-195.
* Certain facilities that are not commonly provided in a hotel, motel or guest house in Australia are taken not to be used or for use to operate a hotel, motel or guest house, see subsection 43-180(6).…
43-140 Using your area in a deductible way
The following table sets out the way you must use *your area in an income year for a deduction to be allowed under section 43-10 (the main deduction provision). The relevant use depends on the time when the capital works began (Column 1) and the type of capital works (Column 2). Column 3 sets out the use.
Table 43-140 – Current year use
Column 1
Date capital works beginColumn 2
Type of capital worksColumn 3
Use of your area at some time in the income yearTime period 1:
After 30/6/97Any capital works
You use *your area for the purpose of:
(a) producing assessable income; or
(b) carrying on *research and development activities.Time period 2:
27/2/92 to 30/6/97 (inclusive)*Hotel building
You use *your area for the *purpose of producing assessable income.
*Apartment building
You use *your area for the *purpose of producing assessable income.
Other capital works
You use *your area for the purpose of:
(a) producing assessable income; or
(b) carrying on *research and development activities.Time period 3:
Before 27/2/92*Hotel building
You use *your area for the *purpose of producing assessable income and:
(a) all or part of that area is used by any entity wholly or mainly to operate a hotel, motel or guest house; and
(b) that hotel, motel or guest house has at least 10 bedrooms that are used or available for use wholly to provide short-term accommodation for travellers.*Apartment building
You use *your area for the *purpose of producing assessable income and:
(a) that area is, is part of or contains an apartment, unit or flat that is used or available for use by any entity wholly to provide short-term accommodation for travellers, and you own or lease at least 9 other apartments, units or flats in the building that are used or available for use by any entity wholly to provide short-term accommodation for travellers; or
(b) that area is, is part of or contains a facility that is used or available for use by any entity wholly or mainly in association with providing short-term accommodation for travellers in apartments, units or flats in the building that are used in the way described in paragraph (a).Other capital works
You use *your area for the purpose of:
(a) producing assessable income; or
(b) carrying on *research and development activities.Note: There are special rules that explain or qualify the uses described in Column 3 of this Table. These rules are set out in Subdivision 43-E (sections 43-155 to 43-195). For example:
* Your area is taken to be used, for use or available for use for a purpose or in a way if it is maintained ready for use for that purpose or in that way. See section 43-160.
* Research and development activities must be carried on in connection with a business carried on for the purpose of producing assessable income, see section 43-195.43-145 Using your area in the 4% manner
You use a part of *your area in the 4% manner if you use it as described in the following Table. The relevant use depends on the time when the capital works began (Column 1) and the type of capital works (Column 2). Column 3 sets out the use.
Table 43-145 – Use in the 4% manner
Column 1
Date capital
works beginColumn 2
Type of capital
worksColumn 3
Use of a part of *your area at some time
in the income yearTime period 1:
After 30/6/97Capital works that are buildings
You use the part of *your area for the *purpose of producing assessable income and:
(a) that part is used by any entity wholly or mainly to operate a hotel, motel or guest house; and
(b) that hotel, motel or guest house has at least 10 bedrooms that are used or available for use wholly to provide short-term accommodation for travellers.You use the part of *your area for the *purpose of producing assessable income and:
(a) that part is, is part of or contains an apartment, unit or flat that is used or available for use by any entity wholly to provide short-term accommodation for travellers, and you own or lease at least 9 other apartments, units or flats in the building that are used or available for use by any entity wholly to provide short-term accommodation for travellers; or
(b) that part is, is part of or contains a facility that is used or available for use by any entity wholly or mainly in association with providing short-term accommodation for travellers in apartments, units or flats in the building that are used in the way described in paragraph (a).You use the part of *your area for the *purpose of producing assessable income, and that part is used by any entity:
(a) wholly or mainly for *industrial activities; or
(b) to provide meal rooms, rest rooms, first aid rooms, change rooms or similar facilities that are wholly or mainly for use by:
(i) workers employed wholly or mainly to undertake the work directly involved in carrying out industrial activities; or
(ii) the immediate supervisors of those workers; or
(c) wholly or mainly as office accommodation for the immediate supervisors of those workers.Time period 2:
27/2/92 to 30/6/97 (inclusive)*Hotel building
You use the part of *your area for the *purpose of producing assessable income and:
(a) that part is used by any entity wholly or mainly to operate a hotel, motel or guest house; and
(b) that hotel, motel or guest house has at least 10 bedrooms that are used or available for use wholly to provide short-term accommodation for travellers.*Apartment building
You use the part of *your area for the *purpose of producing assessable income and:
(a) that part is, is part of or contains an apartment, unit or flat that is used or available for use by any entity wholly to provide short-term accommodation for travellers, and you own or lease at least 9 other apartments, units or flats in the building that are used or available for use by any entity wholly to provide short-term accommodation for travellers; or
(b) that part is, is part of or contains a facility that is used or available for use by any entity wholly or mainly in association with providing short-term accommodation for travellers in apartments, units or flats in the building that are used in the way described in paragraph (a).Other buildings
You use the part of *your area for the *purpose of producing assessable income, and that part is used by any entity:
(a) wholly or mainly for *industrial activities; or
(b) to provide meal rooms, rest rooms, first aid rooms, change rooms or similar facilities that are wholly or mainly for use by:
(i) workers employed wholly or mainly to undertake the work directly involved in carrying out industrial activities; or
(ii) the immediate supervisors of those workers; or
(c) wholly or mainly as office accommodation for the immediate supervisors of those workers.Note: There are special rules that explain or qualify the uses described in Column 3 of this Table. These rules are set out in Subdivision 43-E (sections 43-155 to 43-195). For example:
* Your area is taken to be used, for use or available for use for a purpose or in a way if it is maintained ready for use for that purpose or in that way. See section 43-160.
* A suite of rooms in a hotel building may be treated as one bedroom, see subsection 43-180(2).…
Section 995-1
(1) In this Act, except so far as the contrary intention appears:
4% manner has the meaning given by section 43-145
…
apartment building has the meaning given by section 43-95
…
hotel building has the meaning given by section 43-95
…
quasi-ownership right over land means:
(a) a lease of the land; or
(b) an easement in connection with the land; or
(c) any other right, power or privilege over the land, or in connection with the land.”
background
6. The Applicant’s 1998 income tax return was subject to an ATO audit regarding rental property expenses (T5). After an amount of correspondence between the Applicant’s representative and the ATO, a Notice of Amended Assessment dated 28 April 1998 (T4) was issued, following review of the Applicant’s claim for depreciation on plant of $15,239.00. A special building write-off of $3,447.00 was allowed and the explanation stated (T9, p33):
“Your claim for Special Building Write Off has been increased by $3,447.00 for the following reason(s): you can not claim depreciation on capital expenditure. These items must be claimed as special building write-off. Your claim for depreciation has been adjusted to reflect this. Your claim is adjusted under section 8-1 and 43-10 of the Income Tax Assessment Act 1997.”
Depreciation was decreased by $9,465.00 and the explanation stated (T9, p33):
“You can only claim depreciation for plant and articles. Capital expenditure is claimed as special building write off. Your claim for depreciation is adjusted under section 8-1 and 42-15 of the Income Tax Assessment Act 1997.”
As a result of the amendment, there was an increase in the Applicant’s 1998 liability for tax.
7. An ATO letter to the Applicant dated 12 April 1999 supplied the following details and calculations (T11, pp35-36):
“Section 42-5 of the Income Tax Assessment Act 1997 provides a deduction for depreciation of plant and articles. Plant is defined at section 15-020 of the 1999 CCH Master Tax Guide. A deduction is allowable under section 43-10 of the Income Tax Assessment Act 1997 for capital expenditure. Several of the items claimed as plant have been depreciated are actually capital expenses and should be claimed under special building write off. Under section 43-145 of the Income Tax Assessment Act 1997 a claim of 2.5 percent of the capital expenses is allowable as the accommodation is described as short term traveller accommodation/apartments, where the taxpayer owns or lease 9 or less apartments.
Item
Cost
Depreciation Claimed
Special Building Write Off *
Building
$135 284.00
$4 581.00
$2 864.00
Kitchen Cabinets
$4 234.00
$717.00
$90.00
Bathroom Cabinets
$1 129.00
$191.00
$24.00
Shower Screen
$1 129.00
$191.00
$24.00
Mirrors
$282.00
$282.00
$6.00
Mechanical Installation
$10 664.00
$1 806.00
$226.00
Electrical Installation
$7 809.00
$1 322.00
$166.00
Sewerage Treatment Works
$2 217.00
$375.00
$47.00
Total
$9 465.00
$3 447.00
* Special Building write of is calculated as follows: Cost x 2.5 percent x 309/365
The above table shows a reduction in the amount of depreciation claimed by $9 465.00, that is from $15 239.00 to $5 774.00. Similarly the amount of special building write off claimed should be increased by $3 447.00, that is from nil to $3 447.00.”
8. The objection lodged on behalf of the Applicant (T13), stated, amongst other things, that the “ … ATO reclassified the depreciation allowance schedule unreasonably, fancifully and contrary to normal engineering classification and usage for the item amended.” The particulars of the objection were as follows (T13, pp38-40):
“1. Building Allowance
Taxpayer’s rental property is a villa unit in the Cypress Lakes Resort complex, Pokolbin (near Cessnock). This property is permanently leased to the Cypress Lakes Group Limited, which operates this up-market resort as short-term accommodation for travellers. There are more than 150 villas in the Resort complex used by them for such purpose. The rental income form this property has been included in the tax return.
The capital works began after 27/2/92 and was completed around 30/6/97. It fulfilled the purpose of “use in the 4% manner” by “any entity” as prescribed in Table 43-145 of ITAA 1997. Unfortunately, without any consultation, ATO amended the building allowance to 2.5%. By doing so, the entitled building allowance was reduced by $1717 in this amend [sic] assessment.
2. Depreciation – Sewerage Treatment Works
The Sewerage Treatment Works is plant owned by the Body Corporate, and hence is common property to the villa owners in the Cypress Lakes Resort. It is a set-up situated away from the villa units and comprises pumps, filters and machinery to treat the waste water and sewerage brought by pipes from the hotel complex and villas, before releasing them to the environment.
The Sewerage Treatment Works is not part of the building where the traveller stays.
The whole treatment works in its entirety is a plant, not a building “used in the 4% manner”, or a building used in a “2.5% manner” (Wangarratta Mills Ltd v FCT (1969) 1 ATR 329). We claimed depreciation allowance of $375. ATO allowed 2.5% building allowance on this item. The allowable deduction was reduced by $328.
3. Depreciation – Mechanical Installation
By referring to anything as “mechanical”, we mean something that can move, rotate, by itself or driven by other machinery. A building that houses machinery can be regarded part of the plant and machinery as in Wangaratta Mills Ltd’s case, but a machine can never be – part of a building structure.
ATO allowed this item as 2.5% special building write off but this is not a building structure at all. They are wall air-conditioning units installed in the villa for the use of travellers staying there. They are detachable from the building, and should never be regarded as part of the structure of the building. They are subject to normal wear and tear on mechanical equipment and should be expected to have a working life span of about five, not 40 years. Depreciation Allowance on this item was reduced by $1580.
4. Depreciation - Mirrors
We claimed depreciation on mirrors attached to the walls under section 42-130. They are objects for the use of the occupiers in the course of deriving rental income by the Taxpayer. These mirrors can be removed from the walls and the building structure losses none of its structural feature without those mirrors. If they are mirrors attached to the external walls of a building, they will be part of the building structure. But such structure will definitely cost many times more than $282 as costed by the Quantity Surveyors.
ATO allows $6 as Building Allowance for this item, and reduce the allowable deduction by $276.
5. Depreciation – Electrical Installation
These are electrical allowances such as a stove, hotplates, dishwasher, drier, exhaust fans, light fittings and installations that the Quantity Surveyor segregated from the building structure and are appliances used by the travellers staying in the villa. Hence they qualify for a 20% Depreciation Allowance.
ATO allowed 2.5% as special building write-off. However such appliances cannot be used as a building structure to bear weight and under modern manufacturing practices would be expected to have a life much beyond five years, let alone 40 years. The allowable deduction was reduced by $1 156.
6. Kitchen cabinets, Bathroom cabinets and shower screen
They are fittings to the various rooms in the villa for the use of the guests. They are not fixtures to the land on which the building is erected. They can be detached from the building structure without affecting its integrity. We claimed Depreciation Allowance of 20% p.a. However ATO allowed 2.5% as special building write off. As a consequence the allowable deduction was reduced by $961.
….”
9. In the statement of reasons for the decision refusing to allow the objection, the ATO had stated, in part, as follows (T16, pp54-59):
“Rate of Special Building Write Off
As per Subsection 43-25 (1)…
“For capital works begun after 26 February 1992, there is a basic entitlement to a rate of 2.5% for parts used as described in Table 43-140 (Current year use). The rate increases to 4% for parts used as described in Table 43-145 (Use in the 4% manner).”
Thus, you are entitled to building write off at the basic rate of 2.5% of construction expenditure. Whether you are entitled to a higher rate depends on how you use the property.
Your property is part of the Cypress Lakes Resort. It is used to provide accommodation for holiday makers. Your property is a self contained unit or flat, having its own kitchen and bathroom. This would make it an apartment building as defined by subsection 43-95(2)…
In order for an apartment building constructed between 27 February 1992 and 30 June 1997 to be eligible for a higher building write off it must be used in the 4% manner as outlined in section 43-145…
…
As you only own one unit, you are not using the apartment in the 4% manner. However, you may still claim the building write off at the basic rate of 2.5%.
Depreciation
You feel that certain items listed on your property depreciation schedule have been incorrectly treated as part of the building. Any items in the building that are not depreciable plant under Division 42 … are to be treated as part of the building and eligible for special building write off.
The primary factor in determining whether an item of property qualifies as “plant” is its function. If the function is to provide the setting or environment within which income-producing activities are conducted (eg an office building), an item will not qualify as plant. Conversely, if the function is essentially the permanent means or apparatus used to produce the income (eg machines, manufacturing equipment), the item qualifies as plant, whether it is fixed or movable.
…
Mechanical Installation
Your quantity surveyor states the mechanical installation “includes split system air conditioning installation complete as deemed by ourselves to fall within the classification of the Australia Income Tax Rulings IT 2685”.
Although Taxation Ruling “IT 2685 Income Tax: Depreciation” provides a depreciation rate for air-conditioning units, including the ducting and vents, this does not necessarily mean that in all instances that an item is depreciable plant.
A ventilation system was allowed as plant in the dyeing and spinning yarn business in the case of Wangaratta Woollen Mills Ltd v Federal Commissioner of Taxation (1969) 119 CLR 1, because, as McTiernan stated-
“The complex ventilation system, including the cavity wall, does no more than merely clear the atmosphere. Its structure is an active tool in preventing spoiling of material, and in enabling the operatives to carry out their tasks.”
Therefore it is necessary to consider the function that the air conditioning system plays in the income producing activity to determine whether the item qualifies as plant.
In 6 TBRD (NS) 300 Case F51 the Board of Review stated that whether or not a particular item is an item of plant-
“depends upon the nature of the process being considered and the relationship being considered and the relationship of the item under consideration to that process … in manufacturing where, in order to obtain high tolerances, air conditioning is essential to such precision, the installation itself becomes an integral part of the plant of that undertaking. On the other hand, it is equally clear that an air conditioning installation, for instance in an employees’ wash block, would not, apart from the special provisions contained in the Act, be plant.”
Therefore, in instances where the air conditioning system forms part of an integral part of an income producing activity it would be plant. However, this is not the case with rental properties where the air conditioning units form part of the building that is the setting for the income producing activity.
The air conditioning/mechanical installation is not depreciable plant. However, it forms part of the building for special building write off purposes.
…
The Australian Taxation Office considers the case of Imperial Chemical Industries of Australia and New Zealand Limited v FC of T (1970) 120 CLR 396 to be a leading authority on what constitutes plant and what constitutes setting for income producing activities. Having held that the electrical equipment, including wiring and switchboards, in that case formed “the reticulation system for conveying throughout the building electrical current” drawn form the mains supply, Kitto J concluded –
“The construction of the building as a building of the general type to which it belongs would be incomplete without them (that is, the electrical cabling and switchboards etc), and their function does not go beyond making the building a suitable general setting for a wide range of possible activities.”
…
Sewerage Treatment Works
The case of Imperial Chemical Industries of Australia and New Zealand Limited may also be applied to sewerage treatment works. That is, the building would be incomplete without some method of treating or at lease (sic) disposing of its waste products. The function of those sewerage treatment works “does not go beyond making the building a suitable general setting for a wide range of possible activities.”
Also, from Case 11/97 –
“A conclusion that some item forms ‘part of the fabric’ of a rental property is an issue of fact, arrived at by considering whether the rental property may still be regarded as a complete entity for the purposes which it serves (in an income earning sense) even if the item were absent. If the property would be regarded as incomplete, in this sense, without this item, the item is part of its ‘fabric’”.
Again, in the context of a building let for the purposes of habitation, the Australian Taxation Office does not classify sewerage treatment works as depreciable plant because their function is not the means or apparatus by which the taxpayer’s income is produced.”
10. Subsequently, the Commissioner advised that a full depreciation of $282.00 was allowed in respect of mirrors (T16), however all other items were considered part of the building and were to be written-off at 2.5% per annum as per section 43-25(1) of the ITAA 1997 (T2).
11. In negotiations prior to the hearing, the dispute concerning the electrical installation, kitchen cabinets, bathroom cabinets and shower screen, was resolved (Exhibit R1).
12. In respect of the remaining matters, the building, the sewerage treatment works and mechanical installation, that is, the split system air conditioner, there was no agreed descriptions so that it became a matter of evidence.
evidence
13. The Applicant stated that he was a qualified industrial chemist, had a PhD and was employed as a technical services manager. He purchased the rental property on 26 August 1997 for $275,000.00, which included the cost of furniture (T6, p21). It was located within the Cypress Lakes Resort. He described the Cypress Lakes Resort as having a resort centre/clubhouse, which was the reception area, a convention centre, tennis and swimming pool, about 170 individual lots were around the hillside and there was a golf course further afield (Exhibit A1). The Applicant’s lot was strata title and the complex facilities were community title. He leased his lot to the Cypress Lakes for seven years. The building in which the Applicant’s lot was located, was two storey and his lot was the upper level.
14. The Applicant went to the Cypress Lakes Resort at Christmas time to holiday and on weekends to play golf. He sometimes stayed in his property. In any event he paid to stay overnight. The Applicant described the main entrance to the resort centre/clubhouse, which was the reception area, as having a waiting area, and that to the left of the reception area there was a desk occupied by staff and to the right there was a property sale stand. Further into the resort centre/clubhouse was a restaurant, bar and professional rooms. The Applicant described driving off the main road to reach the resort centre/clubhouse. He booked in at the reception desk, and was given keys to the allocated accommodation. He then drove to that accommodation. He parked his motor vehicle in an open parking area which was designated for a cluster of properties.
15. In the property there was the “usual” compendium giving details of services and activities. The lights were activated by the door key and there was a notice as to how to operate the airconditioning. The property had its own telephone and he stated calls were “charged to the room”. Food and beverage room service was available from 6am to 10pm. On occasions, he had complained to the Cypress Lakes Resort about the standard of the rooms, and service delays.
16. The Applicant stated that the Cypress Lakes Resort paid for repairs to his property and he did not contribute to those costs. He stated his only contribution was about $100.00 a quarter into a general fund.
17. There were three air-conditioning outlets, two wall mounted and one floor fan coil units; one located in each bedroom and the lounge room. There was a condenser and motor underneath the building. Cypress Lakes was responsible for the proper working order of the airconditioning.
18. The Applicant estimated that the sewerage treatment works was located about 400 metres beyond the gold course. The works was estimated to be about 40-50 metres in width and there were a number of tanks estimated to be about the size of an Olympic swimming pool. The works treated the sewerage, which was then was used on the golf course.
19. The Applicant was referred, by his representative, to a copy of A New Tax System (Goods and Services Tax) Act 1999 (Cth) and the “GST Private Ruling (Cypress Lakes Group)” (Exhibit A5), and stated that he understood that Cypress Lakes was operating as a hotel.
20. In cross-examination, Mr Neill put to the Applicant that he was asserting that the property comprised part of a hotel. The Applicant agreed with this and stated that he was relying on features such as a reception area, and facilities such as room service. In response to a question as to how the building was occupied, the Applicant stated there were a number of ways, such as by pre-booking, which he did, or on arrival. The Applicant stated that if you did not know the way to a property, the staff would drive there and if you knew the way, the staff merely gave you a key. He stated reception was open 24 hours and he also confirmed there was room service and a daily cleaning service.
21. The Applicant was shown Exhibit A2, which was a photograph of his property. He described it as a two storey building with two windows upstairs and an entrance door, covered by an awning, downstairs. The upstairs and downstairs properties had separate entrances. There was no connection way between the upstairs and downstairs properties.
22. The Applicant agreed that it was true to say that accommodation was “short” stay, and he understood that could be one to two nights, or up to two to three weeks.
23. The Respondent’s representative put to the Applicant that as a matter of fairness, while the accommodation had aspects of a hotel, he should also concede that it had aspects of a serviced apartment. The Applicant stated that he only had one experience of a serviced apartment and observed that on that occasion the reception was not open after 9pm, there was no meal service, and no room service.
24. Turning to the other things, it was put to the Applicant that he was contending that the airconditioning unit and sewerage treatment works were plant, that they were part and parcel of the complex. The Commissioner’s representative indicated to the Applicant that the state of the law was that the degree of attachment does not determine an item as plant.
25. The Applicant stated that he had not seen the sewerage treatment works and that his knowledge of its function was that it treated or recycled water for use on the golf course. He was unaware whether it was connected to a council sewerage system. He considered it was part of the community title and understood that each property owner contributed pro rata to its costs.
26. In respect of the airconditioning (Exhibit A3), the Applicant confirmed that the outlets were connected by pipe to the outside motor and compressor unit. He also confirmed that if the airconditioning had not worked he would have complained about it as well. The Applicant agreed it was fairly essential to the amenity of a property.
27. The Respondent’s representative asked whether it was the lease (Exhibit A4) which defined the Applicant’s relationship as owner vis-a-vis the Cypress Lakes Resort, that is, whether it was that ownership by which he returned income and obtained deductions. The Applicant agreed that the lease described property as an “apartment” however he had not looked at the provisions of the lease closely.
applicant’s submissions
28. The Applicant’s representative’s oral submissions were largely in accordance with his written submissions (Exhibit R2), as follows.
29. In respect of the building allowance, it was noted that the Applicant’s rental property was a lot in the Cypress Lakes Resort complex, Pokolbin (near Cessnock). The property was permanently leased to Cypress Lakes. It was contended Cypress Lakes operated an up-market resort as short-term accommodation for travellers. It was also noted that there were more than 150 properties in the complex used by it for such purpose. The rental income from the property had been included in the tax return of the Applicant in the relevant year.
30. It was stated that the Cypress Lakes Resort capital works began after 27 February 1992 and were completed around June 1997. It was contended that it fulfilled the purpose of “use in the 4% manner” by “any entity” as described in Table 43-145 of ITAA 1997. Column 3, in time period 1 of table 43-145 states:
“you use that part of your area for the purpose of producing assessable income and:
(a) that part is used by any entity wholly or mainly to operate a hotel, motel or guest house; and
(b) that hotel, motel or guest house had at least 10 bedrooms that are used or available for use wholly to provide short-term accommodation for travellers.”
31. The Applicant’s representative contended that the Respondent had classified the Applicant’s property as a unit in an apartment building, and because the Applicant did not own or lease 10 units in the same hotel building, the Applicant was denied the 4 percent rate. He was allowed 2.5 percent capital works. The Applicant’s representative contended the property was used as a hotel room by Cypress Lakes for short term traveller accommodation and that Cypress Lakes met the definition of “any entity”. It was noted that the ITAA 1997 did not define an “apartment” or “hotel” and that those terms were referable to time of completion. It was submitted that the property was a hotel room in a hotel complex and met the requirements of Division 43, so that the deduction for the building was 4 percent per annum.
32. The Applicant’s representative submitted that the Applicant was entitled to depreciation allowance for the sewerage treatment works and the air conditioning as plant, under Division 42 of the ITAA 1997. It was stated that the Applicant’s depreciation allowance in respect of the sewerage treatment works was due to his entitlement of that common property through the body corporate Community Association, and that the plant was used by Cypress Lakes Resort for its day to day operations. It was contended that the principle in Wangaratta Woollen Mills Ltd v Federal Commissioner of Taxation (1969) 119 CLR 1 applied and that the sewerage treatment works was plant in its entirety, so that the Applicant was entitled to the 20 percent depreciation allowance.
33. It was further contended that the sewerage treatment works and the air conditioning were not part of the setting (building) to produce assessable income. It was asserted they were used by the tenant and the occupant of the setting who provided income to the Applicant. They were analogous to the hot water system and electric stoves in Taxation Case Q8 (1964) 15 TBRD 32 where they were considered plant and subject to depreciation allowance.
respondent’s submissions
34.
The Respondent’s argument was that in order to properly claim the 4 percent rate available in Table 43-145 of the ITAA 1997 the building’s description must fit within that of a “hotel building”. It was argued that the ITAA 1997 was not silent on the definition of “hotel building”. While ordinary dictionary definitions are relevant, it was submitted that the crucial distinction, for the purposes of the ITAA 1997, was found in sections 995-1 and 43-95 leading to the “use” found in section 43-90, which internally refers to time period 1 within that table, which relevantly provides for “use”
as follows:
“For use by any entity wholly or mainly to operate a hotel, motel or guest house that has at least 10 bedrooms that are for use wholly or mainly to provide short-term accommodation for travellers”.
35. The Respondent’s representative argued that the distinguishing factual description emphasises bedrooms as a feature of the accommodation, and the nature of the short-term accommodation offered. In the Applicant’s case, the building configuration is short-term accommodation in separate houses, or apartments, or wholly self-contained living quarters. Those facts, it was argued, take the building outside of the statutory definition of “hotel building”.
36. In respect of the sewerage treatment works, it was conceded that if ownership was established within section 43-115 of the ITAA 1997, then the separate premises are facilities within the (b) definition of “apartment building” in Table 43-140. However, exclusive ownership of that building was in doubt and might need to be apportioned to the Applicant’s pro rata ownership of the common or community property. It was a matter of evidence.
37. Also, it was the Respondent’s submission that the sewerage works were part of capital works, and not plant. That submission relied on AAT Case 11/97; No 11,655 (1997) 97 ATC 173, which distinguished the concepts of “plant” and “setting”.
38. Further, it was the Respondent’s submission that the degree of affixation, on which the Applicant relied, was no longer a sufficient or current test of whether a thing was “plant”. It was contended that the predominant test of whether an item is “plant” or part of the “setting” is the functional test, which does not mean “use” or affixation but whether plant is, in fact, part of the setting. As the term “plant” is not defined in ITAA 1997, the application of the term is a matter of factual context and evidence of the particular circumstances. It was asserted that it was well established that the building itself, in the case of rental premises, is not “plant” but rather is more aptly categorised as “setting”. The Respondent regarded Wangaratta Woollen Mills Ltd v Federal Commissioner of Taxation [supra] as confined to its own facts.
39. Similarly, the Respondent’s view of the mechanical installation/air conditioning was the same as the principles upon which it relied in relation to the sewerage treatment works.
tribunal’s consideration and reasons
40. The Tribunal must take into account all the evidence before it and apply the law.
41. The Tribunal makes the following findings, based on the Applicant’s oral evidence, the written submissions and the tendered exhibits. In respect of the Applicant’s property the Tribunal finds:
(a)the construction commenced after 27 February 1992 and was completed before 30 June 1997;
(b)it is the upper level of two storey villa style accommodation;
(c)it is available for short stays;
(d)it is used for recreational and leisure accommodation; and
(e)during the tax year ending 30 June 1998, the Applicant received assessable income from the property.
42. In regard to the GST Private Ruling (at Exhibit A5) which stated, amongst other things, that “ …Cypress Lakes operates its namesake resort as a commercial residential facility in the form of a hotel”, the Tribunal is not bound, in this matter, by that GST Private Ruling.
43. The Tribunal noted that the Lease (in blank) (Exhibit A4) referred to use of a “serviced apartment”.
capital works deductions
44. In overview, Division 43 (sections 43-1 to 43-260 of ITAA 1997) provides for capital works deductions. “Capital works” is not defined, however Division 43 applies to buildings, structural improvements and environment protection earthworks (section 43-20(1)) and extensions, alterations and improvements to those (section 43-20(2)).
45. The background to the argument in this matter starts at section 43-25 of ITAA 1997. According to section 43-25, for capital works begun after 26 February 1992, the rate of deduction is 2.5 percent for capital works used as described in Table 43-140 (Current year use) and increases to 4 percent for those used as described in Table 43-145 (Use in the 4% manner).
46. According to Table 43-145, the entitlement to the 4 percent manner depends on the time when the capital works began (Column 1) and the type of capital works (Column 2). Column 3 sets out the use. Relevantly, the time period 2 includes “hotel building” and “apartment building”, and starts 27 February 1992. Dealing with the later apartment building first, the Applicant does not meet the column 3 requirement of having at least 9 other apartments, etc in the building. In relation to a hotel building in that period, however, it does not appear that the Applicant does have to own any particular quantity. A “hotel building” in this period is used in the 4 percent manner if the taxpayer uses the building for the “purposes of producing assessable income” and all or part of the taxpayer’s part of the building is used by any “entity” wholly or mainly to operate a hotel, motel or guest house. The Tribunal has already found that during the tax year ending 30 June 1998, the Applicant received assessable income from the property. It seems to the Tribunal that Cypress Lakes is capable of being “any entity”. It therefore remains for the Tribunal to consider the nature of a “hotel building” and in particular whether the Applicant’s property is capable of that meaning.
47. A “hotel building” is defined in section 995-1 of ITAA 1997 by pointing to section 43-95, which relevantly provides as follows:
“(a) a building begun after 21 August 1979 and before 18 July 1985, or after 26 February 1992 and before 1 July 1997, that, at the time of completion of its construction, was intended to be used in the way referred to in Column 3 of Table 43-90 (intended use at completion) for a hotel building; or
…”
46. Table 43-90 of ITAA 1997 relevantly provides as follows:
“For use by an entity wholly or mainly to operate a hotel, motel or guest house that has at least 10 bedrooms that are for use wholly or mainly to provide short-term accommodation for travellers”.
48. Accordingly, the building is a hotel building if, amongst other things, at the time construction was completed, the intended use by any “entity” was to operate it wholly or mainly as a hotel, motel or guest house. The Respondent’s representative contended that the spirit and intention of the legislation was that a single building with many bedrooms attracted the 4 percent deduction, saying that it was the constant movement of guests through a building to its bedrooms that was a distinguishing feature. Save for the Applicant’s evidence as to his experience and observations of the use of Cypress Lakes, there was no evidence as to that intention. The Tribunal notes that Table 43-90 (when read with section 43-75(2)) preserves, for capital works started before 1 July 1997, the position under Divisions 10C and 10D of Part III of the Income Tax Assessment Act 1936 (“ITAA 1936”). The provisions of ITAA 1936 only granted a deduction if a building was at the time of completion of construction intended to be used for the eligible purpose, however, reference had to be made to when the capital works started being constructed. If a building was not intended at that time to be so used, then a deduction is not allowed.
49. The contention of the Respondent’s representative contrasted with the Applicant’s evidence, that the building was the upper level of two-storey villa style accommodation. The Tribunal, however, does not necessarily agree that a single building, at least in terms of the sections under consideration, is necessarily implicit in the meaning of “hotel building”.
50. In addition, to be a hotel building, motel or guest house, the building must also, at the time construction was completed, have at least 10 bedrooms used by “any entity”. The Tribunal has already held that Cypress Lakes satisfies that description of “any entity”, and that entity need not be the same as the taxpayer, or the Applicant in this case. The Tribunal however was not satisfied that there was sufficient evidence that the Applicant’s property, or indeed Cypress Lakes, was wholly or mainly to provide “short-term accommodation for travellers”. There is no definition of “short-term” in ITAA 1997, however Macquarie Concise Dictionary, 3rd edition, defines “short-term” as “covering a comparatively short period of time”. “Short-term”, however, is qualified in section 43-90 of ITAA 1997, which states it is “for travellers”. The Applicant’s evidence was that his experience and observation was that it provided short break accommodation, however it was for those seeking recreational and leisure activities. There was no evidence that those seeking accommodation of a more itinerant nature used it. The Tribunal finds that having regard to the evidence in this case, the Applicant’s property fails to meet that requirement of “short term accommodation for travellers”. Consequently, the Applicant’s property fails to fall within the description of “hotel building”. That part of the decision under review concerning the 2½ percent deduction for capital works is therefore to be affirmed.
sewerage treatment works and mechanical installation
51. Generally, the owner of capital works is the entity that is entitled to claim the deduction for particular capital works: section 43-115 of ITAA 1997. Specifically, section 43-115 sets out that “your area”, for owners of capital works, is the part of the “construction expenditure area” of capital works that a taxpayer owns.
52. The unchallenged submissions of the Applicant’s representative were that the Applicant’s property “is a strata title unit in a resort of community title. The Community Association owns the golf course, community hall etc and the Sewerage Treatment Work…” (Exhibit R2). The Applicant’s evidence supported that submission. Upon that submission alone, the Tribunal considered that it was unable to accept that the Applicant was owner of the sewerage treatment works. Also, the Tribunal finds, based on its own knowledge and observations, that upon registration of a strata plan, certificates of title of ownership are issued for each lot and any common property, being that part of a parcel of land not comprised in any lot, shown in that plan. Then there comes into existence, upon registration of the strata plan, what was formerly called a “body corporate” and now called an “owners’ corporation”. Usually, the estate or interest of the owners corporation in common property vested in it, is held by the owners corporation, as agent where there are different proprietors of two or more lots, for those proprietors as tenants in common, in shares proportional to the unit entitlement of their respective lots. While that finding may well lend itself to support some apportionment with regard to the Applicant’s unit entitlement, which was also contemplated by the Respondent’s submissions, the Tribunal doubts that this amounts to a quasi-ownership right over land, having regard to section 995-1 and section 43-120. In any event, there was no evidence before the Tribunal to support that apportionment. If however, the Tribunal is wrong as to ownership of the treatment works, it agrees with the finding of the ATO (T16, p59), that the sewerage treatment works are not depreciable plant because their “function is not the means or apparatus by which the taxpayer’s income is produced.” Further, adopting the analysis in AAT Case 11/97; No 11,655 (1997) 97 ATC 173, in the case of rental premises the building is categorised as “setting” and not “plant”. Thus, the sewerage treatment works were part of capital works and not plant. For the foregoing reasons, the Tribunal would not allow any deduction for the sewerage treatment works.
53. In relation to the mechanical installation, the Tribunal also observes that usually a strata lot is defined by reference to floors, walls, ceilings or structural cubic space within a building. Generally, the effect is to make pipes and ducts located within a strata lot, and not for the exclusive enjoyment of that lot, common property, and again, usually, the owners corporation is the owner and responsible for maintenance and repair. It is however possible for a pipe or duct to be for the exclusive enjoyment of a lot. The Applicant’s evidence here was that the split system air conditioners for Lot 604 was only capable of being used by that lot. That evidence was unchallenged. The Tribunal accepts that evidence. In those circumstances the Tribunal is prepared to accept that split system air conditioners was part of the Applicant’s property.
54. Then the question for the Tribunal is whether the split system air conditioners should be deductible as part of the building as to 2.5 percent under Division 43 or depreciable as to 20 percent under Division 42. The submissions of the Applicant dealt in some detail with the case law. The submissions of the Respondent relied upon the distinctions between the concepts of “setting” and “plant” by Senior Member Block in AAT Case 11/97; No 11,655 (1997) 97 ATC 173. It is useful to adopt that analysis and the summary of conclusion, as follows (at ATC 184):
“10. Summary of conclusions on “plant”
The Tribunal as a matter of convenience summarises its conclusions thus far as follows:
(a) A rental property itself is not ''plant'' for the purposes of s 54. It is the ''setting'' for the income earning activities.
(b) That which forms a ''part of the fabric'' of the property, in a metaphorical sense, or in other words, that which is an ''integral part of the structure of the premises'' is therefore also not ''plant'' for the purposes of s 54. It is to be regarded as a part of the ''setting'' of the income earning activity.
(c) A conclusion that some item forms ''part of the fabric'' of a rental property is an issue of fact, arrived at by considering whether the rental property may still be regarded as a complete entity for the purposes which it serves (in an income earning sense) even if the item were absent. If the property would be regarded as incomplete, in this sense, without the item, the item is part of its ''fabric'' . A consideration of how the item is affixed to the unit, in other words, its degree and mode of attachment, assists in deciding this question but is not in itself determinative.
(d) If the item is properly regarded as NOT forming part of the ''setting'' by the above steps, there is a further need to consider (positively) its function in the context of the income-earning activities. If it can be said to be related to those activities in a sufficiently significant sense, it will be ''plant'' under s 54.
11. Articles
(a) An item may qualify for a depreciation deduction, even if it is not ''plant'', if the item can be regarded as an ''article'' for the purposes of s 54: Quarries Limited v Federal Commissioner of Taxation (1961) 106 CLR 310. The word ''article'' is also not defined in the Income Tax Assessment Act, but it has been given a very wide meaning in the cases. Thus Taylor J said in Quarries Limited v Federal Commissioner of Taxation (1961) 106 CLR 310 at 316:
"I see no reason for denying to the word ''article'' the comprehensive meaning which it normally bears or for thinking that it was not used in the section by way of extension [to the word ''plant''].”
(b) And Mason J (as he then was) said in FC of T v Faichney 72 ATC 4245 at 4250; (1972) 3 ATR 435 at 440:
"The word ''article'' according to The Shorter Oxford Dictionary bears the meaning ''a piece of goods or property'' . The word would, I think, according to its normal and ordinary meaning include a carpet or curtain, a desk and a bookshelf.”
(c) However, an item cannot be an ''article'' if it is a structure attached to land. Per Taylor J in Quarries Limited v Federal Commissioner of Taxation (1961) 106 CLR 310 at 316:
"Of course, ''article'' cannot ordinarily be taken to comprehend a structure erected or built in situ...”
(d) The same would apply if the item were regarded as an integral part or the ''fabric'' of such a structure. So much appears from Kitto J in Imperial Chemicals Industries of Australia [185] and New Zealand Limited v Federal Commissioner of Taxation (1970) 120 CLR 396, where his Honour said in relation to false ceilings found to be part of the structure of the building (at p 398):
"In my opinion, while they are in position they are plainly not ''articles''.”
This is not to say, however, that an item simply attached to a building will not qualify as ''articles'' : the carpet held to be an ''article'' in FC of T v Faichney 72 ATC 4245; (1972) 3 ATR 435 was more than likely in some way attached, though it was clearly not an integral part of the home there under consideration.
Thus, as a finding that an item is part of the ''fabric'' of a structure (where the structure is itself the ''setting'' of the taxpayer's operations), will result in its being held to not be ''plant'' ; such a finding will also preclude any characterisation of the item as ''articles''.”
55. The Tribunal, based on its own knowledge and observations, finds that leisure and recreational accommodation usually has air conditioning. Adopting the analysis in AAT Case 11/97; No 11,655 [supra], the Tribunal finds that split system air conditioners form part of the fabric of the setting in the circumstances of the Applicant’s rental property that provides leisure and recreational accommodation. It is part of the setting of the capital works, and not plant.
decision
56. That part of the decision under review regarding the sewerage treatment works is set aside and remitted back to the ATO, with the direction that the sewerage treatment works is not deductible at all, and that part of the decision under review concerning the building and mechanical installation is affirmed.
I certify that the 56 preceding paragraphs are a true copy of the reasons for the decision herein of Ms J A Shead
Signed: .....................................................................................
AssociateDate/s of Hearing 9 February 2001
Date of Decision 11 October 2001
Representative for the Applicant Mr A ChanRepresentative for the Commissioner Mr S Neill
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