Tax Depreciation Myths

There is a field of study that shows that you cannot teach an adult anything that is contrary to their current opinion without first challenging or disproving their current opinion.

I recently had an email war with a preparer of tax depreciation schedules about what you can claim Division 43 on… either the historic construction costs or the purchase price of a subsequent buyer (yes I know it is obviously the historic construction cost – or “undeducted construction expenditure” to be precise).

He said what he thought was correct. I said what I thought was correct. He restated his opinion. I quoted legislation (section 43-70) proving my position. He restated his opinion. I quoted Taxation Rulings (TR 97/25) proving my position. He restated his opinion… and then I stopped the never ending circle and showed him not why I was right, but rather I engaged with his understanding and proved it was wrong. And it worked.

I found a quote on the ATO website where the Commissioner stated that you cannot use the purchase price for Division 43, directly contradicting his position. I then stated exactly what I had said before (look at 43-70 and TR 97/25) but now, with his previous position challenged, he would accept the merit of my argument.

So from now on, when I am trying to teach people about tax, I am going to ask myself is there a myth I have to dispel first before I explain what I really want them to know.

And here is my first attempt at writing training this way… Expose the myth, then teach the truth (wow that is getting a bit to deep)…

The Myths of Tax Depreciation Schedules

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About Ken Mansell

As a stay at home Dad most of the week this is my way of pretending I am still the tax counsel of ASX and SEC listed companies, working at big 4 firms, working at the Federal Treasury, on the Henry Review and at Parliament House for the previous government.
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