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DG 2: Application of this subpart
or “This section explains how to apply specific tax rules for different types of property and expenses”
You could also call this:

“What counts as an asset for tax purposes in this part of the law”

In this part of the law, you’ll learn about what counts as an asset for tax purposes.

An asset is something you own that you use partly to make money and partly for your own enjoyment. It could be land, a boat, or an aircraft. For boats and aircraft, they need to be worth at least $50,000. The asset also includes any related items or accessories.

You’re considered to have an asset if you don’t use it for at least 62 days in a year, or 62 working days if it’s only used on work days. This rule applies to people, but not to most companies.

There are some exceptions. The asset isn’t counted if you only use it a little bit for personal reasons and mostly for business (not renting or chartering). It’s also not counted if it’s a house that you only rent out long-term.

When we talk about the value of an asset, we mean how much it would cost to use it if you were renting it from someone else in a fair deal.

If you own the asset through a partnership or a special type of company, we add up the value of everyone’s share.

Using an asset means actively using it for what it’s meant to do.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

Next up: DG 4: Meaning of private use for this subpart

or “What counts as personal use of an asset for tax purposes”
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Part D Deductions
Expenditure related to use of certain assets

DG 3Meaning of asset for this subpart

  1. For the purposes of this subpart, an asset, for an income year, means an item of property described in subsection (2) held by a person described in subsection (3) to the extent to which the item—

  2. is used by the person in the income year partly to derive income and partly for private use; and
    1. is not in use—
      1. for at least 62 days in the income year; or
        1. when the asset is typically used only on working days, for at least 62 working days in the income year.

        2. Subsection (1) applies to an asset that, in the complete form in which the person uses it for income-earning purposes,—

        3. is 1 of the following:
          1. land, including improvements to land:
            1. a ship, boat, or craft used in navigation on or under water, whether or not it has a means of propulsion:
              1. an aircraft; and
              2. for an item referred to in paragraph (a)(ii) and (iii), has—
                1. a cost to the person of $50,000 or more; or
                  1. a market value on the date of acquisition of the asset of $50,000 or more, if the asset was not acquired at market value; and
                  2. includes any related items, things, or accessories pertaining to the asset.

                    1. A person excludes a company other than a close company.

                    2. Despite subsection (2), an asset is excluded from the operation of the rules in this subpart if—

                    3. the use of the asset meets the following criteria:
                      1. the private use of the asset is minor; and
                        1. the main use of the asset is use in a business that is not a rental or charter business; and
                          1. for a company or a trustee of a trust, the use of the asset places an obligation on the company or the trustee, as applicable, to pay fringe benefit tax or income tax:
                          2. the asset is a residential property and its only income-earning use is as a long-term rental property:

                              1. For the purposes of this subpart, other than subsection (2)(b)(ii), market value means the price at which the asset is provided for use at a particular time or for a particular season—

                              2. in the open market; and
                                1. freely offered; and
                                  1. made on ordinary terms; and
                                    1. to a member of the public at arm's length.

                                      1. For the purposes of this section, if the asset is held through a partnership or a look-through company, the value of the interests in the asset held by all the partners in the partnership or all the shareholders in the look-through company, as applicable, is aggregated.

                                      2. For the purposes of this subpart, the use of an asset is the active use of the asset for its intended purpose.

                                      Notes
                                      • Section DG 3: inserted (with effect on 1 April 2013 and applying for the 2013–14 and later income years for an item of property referred to in section DG 3(2)(a)(i), and for the 2014–15 and later income years for an item of property referred to in section DG 3(2)(a)(ii) and (iii)), on , by section 30(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
                                      • Section DG 3(3): amended, on , by section 258 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                                      • Section DG 3(4)(c): repealed (with effect on 1 April 2013 and applying for the 2013–14 and later income years), on , by section 35(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).