ATO Interpretative Decision

ATO ID 2002/567

Income Tax

Capital write-off for painting newly acquired rental property
FOI status: may be released

This version is no longer current. Please follow this link to view the current version.


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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 the taxpayer allowed a deduction for capital write-off, for costs incurred in painting a newly acquired rental property, under Division 43 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision

No. The taxpayer is not allowed a deduction for a capital write-off, for costs incurred in painting a newly acquired rental property, under Division 43 of the ITAA 1997.

Facts

The taxpayer purchased a rental property which required internal painting at the time of purchase. After settlement, but before the first tenant moved in, the taxpayer had the property repainted.

Reasons for Decision

Section 43-20 of the ITAA 1997 contains a list of capital works that are eligible for capital write-off. The list includes alterations or improvements.

Where an item which has an existing painted finish is repainted, this is not regarded as constituting an alteration or structural improvement. Painting in this instance has the purpose of remedying defects in the existing paintwork. Therefore, the cost of painting would not be included in the list of capital works write offs under the provisions of Division 43 of the ITAA 1997.

Date of decision:  5 March 2002

Year of income:  Year ending 30 June 2002

Legislative References:
Income Tax Assessment Act 1997
   Division 43

Related Public Rulings (including Determinations)
Taxation Ruling TR 97/23

Keywords
Deductions & expenses
Structural improvement expenses
Initial repair expenses

Business Line:  Private Groups and High Wealth Individuals

Date of publication:  31 May 2002

ISSN: 1445-2782

history
  Date: Version:
You are here 5 March 2002 Original statement
  5 September 2003 Archived

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

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).