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  • Consultation: draft TR 2019/D6 Guidance on labour costs incurred in relation to construction or creation of capital assets

    We have released draft Taxation Ruling TR 2019/D6 Income tax: application of paragraph 8-1(2)(a) to labour costs related to the construction or creation of capital assets for consultation.

    We encourage you to provide your feedback on this tax ruling by 14 February 2020.

    While TR 2019/D6 (PDF 165KB)This link will download a file affects primarily the infrastructure, energy production and distribution, oil, gas and mining industries, it has broader implications to any business constructing or creating capital assets.

    The ruling explores section 8-1 of the Income Tax Assessment Act 1997 and confirms the ATO’s long standing view that labour costs incurred specifically for the creation or construction of capital assets may be capital in nature. It provides examples to assist taxpayers in understanding the implications of the ruling in a relatable manner.

    The ruling is proposed to apply both before and after its date of issue. If you have immediately deducted labour costs incurred in relation to the creation or construction of capital assets we encourage you to:

    • read the tax ruling
    • ask us for our view through a private ruling
    • seek independent professional advice, and/or
    • make a voluntary disclosure to reduce penalties that may apply.

    Next step:

    • Provide your feedback on TR 2019/D6 by 14 February 2020.

    See also:

    • Open consultation – learn about our advice under development program where we list key matters we are currently considering providing advice and guidance on. These pages are updated monthly.
    Last modified: 25 Nov 2019QC 60673