Fund income tax return instructions 2011

Balancing deduction on destruction

If a building is destroyed during an income year, you can claim a deduction for the remaining amount of undeducted construction expenditure that has not yet been deducted, less any compensation received. This applies even if the destruction or demolition is voluntary.

You can claim the deduction in the income year in which the destruction occurs.

The deduction is reduced if the capital works are used in an income year only partly for the purpose of producing assessable income.

For guidelines on these measures, see Taxation Ruling 97/25 and addendum.

Sections within Appendix 1: Capital works deductions

• Capital works
• Who can claim?
• Lessee of a building
• Requirement for deductibility
• No deduction until construction is complete
• Establishing the deduction base
• Construction expenditure
• Construction expenditure area
• Pool of construction expenditure
• Deductible use
• Special rules about uses
• Calculation and rate of deduction
• Capital works begun before 27 February 1992 and used as described in table 43-140 of the ITAA 1997
• Capital works begun after 26 February 1992
• Undeducted construction expenditure
• Balancing deduction on destruction