ATO Interpretative Decision

ATO ID 2001/431 (Withdrawn)

Income Tax

Deduction - Relocation Expenses
FOI status: may be released

This ATO ID is withdrawn as it is a straightforward application of the law.

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Is expenditure for relocating furniture and equipment to new premises in another State deductible under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision

No. Relocation expenses incurred by a company in moving furniture and equipment to another State to take up a new contract are capital in nature and not deductible under section 8-1 of the of the ITAA 1997.

Facts

The company moved business premises to take up a contract in another State. The contract will last for nine months. This necessitated a corporate relocation to the other State. The company intends to return to the home State on completion of the contract. The company sees this as a short-term relocation for business purposes only. The company incurred expenditure in relation to moving equipment and furniture to the new premises.

Reasons for Decision

Section 8-1 of the ITAA 1997 allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income or necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income except where the loss or outgoing is of capital or is of a capital, private or domestic nature.

Generally, outgoings associated with a change in business operations or premises are of a capital nature.

Where expenses are incurred in altering or extending the taxpayer's existing facilities, such payments are capital as they relate to the business entity structure or 'profit -yielding subject' as described by Dixon J in Sun Newspapers Ltd v. FC of T (1938) 61 CLR 337 at 357-363.

Therefore, costs of acquiring temporary or permanent premises are usually capital in nature. Expenses incurred in preparing the new premises and of moving plant and equipment are also of a capital nature.

Date of decision: 10 September 2001

Year of income: 30 June 2001

Legislative References:
Income Tax Assessment Act 1997
section 8-1

Case References:
Sun Newspapers Ltd v. FC of T
   (1938) 61 CLR 337
   (1938) 5 ATD 87
   45 ALR 10
   (1938) 1 AITR 403

Keywords
Office removal & relocation expenses

Business Line: Private Groups and High Wealth Individuals

Date of publication: 6 October 2001

ISSN: 1445-2782

history

	Date:	Version:
	10 September 2001	Original statement
You are here	30 July 2010	Archived

Copyright notice

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).