Ecoathlete,
While I am no longer in Aus, I am originally from there. Prior to taking up flying, I spent just a few years in finance.
There are several elements in your question. I will do my best to make this quick and painless.
The Australian Tax Office and Australian Accounting Standards will require that you depreciate any asset employed in the generation of revenues. There is some scope for you to nominate the rate of depreciation, but it must be 'reasonable' and reflect the realistic change in economic value of the asset over time.
Repair costs and minor maintenance costs attributed to the asset are treated simply as expenses, and represent a deductible expense in the year in which they are incurred.
If you spend some money IMPROVING the asset then you are changing its capital value, as such book depreciation will need to be adjusted for the amount of value you are now adding to the asset. eg. an overhaul.
Putting aside some money for your future overhaul is an expense in the year in which it is incurred, but gives rise to a provision for future use. This, in accounting terms, simply recognises that although an overhaul is a 'point in time' event, it occurs as a result of the prior usage of the asset.
All I have discussed here is related to simple 'book' accounting. In the real world the market place tends to dictate the worth of a given asset - in any industry. It is appropriate to compare your book or 'written-down' value to market value from time to time to ensure they are not grossly mis-aligned. Simple entries to your books can be made for this adjustment.
There is another complexity. The main reason a business will WANT to depreciate an asset is because it will lower pre-tax profit in book terms without actually spending any money! The tax office has it's own set of allowable depreciation schedules, and these are asset and industry dependent. You can depreciate in any way you like for your pre-tax profit for your books, but the tax office will require you to utilise their schedules as they apply to your business to determine the tax payable for a given financial period in your tax return. This is now getting into tax effect accounting.
The depreciation is a cost. The maintenance overhaul amount is a cost, you're just recognising it as a cost now in small chunks rather than take one big hit to your pre-tax profit in some future year.
I'm quite sure this will have put other pruners to sleep by now. If you would like more maybe PMs may be appropriate. Oh, and secure the services of a good tax-specialist accountant. His, or her, fee will be more than recovered by the tax they will save you if you get all this done properly.
Regards,
GP