Paul purchased an industrial building that is used in carrying on a business in June 2018 for $2.6 million. The construction costs of the building were determined by a quantity surveyor to be $2 million. What is the deduction that Paul can claim for the purchase of this building under Division 43?

Question

Quizplus · Accepted Answer

Under Division 43, the deduction for capital works is based on the construction cost of the building. The rate for industrial buildings is typically 2.5% per annum. Therefore, the deduction is 2.5% of $2 million, which equals $50,000 per year. Since Paul purchased the building in June 2018, he can claim this deduction for the 2018-2019 tax year.

Paul Purchased an Industrial Building That Is Used in Carrying