| Disclaimer This edited version will be removed from the Database after 30 September 2025. If you believe the issues detailed in this edited version warrant retention in an alternative form, email publicguidance@ato.gov.au This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private ruling
Authorisation Number: 1011529981101
This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.
Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.
Ruling
Subject: Rental property expenses
Question
Are you entitled to a deduction for expenditure incurred in fixing your rental property?
Answer
Yes.
Relevant facts and circumstances
You have a rental property.
Your tenants advised that the rental property needed to be fixed. You had concerns about the safety of your tenants, possible legal action and the possibility that they may vacate the premises if the problem was not fixed.
At the time you purchased the property, this problem had not occurred.
You attained advice from a professional company who advised about the method of repair.
The work was completed and you incurred the expenses to fix the problem.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 25-10.
Reasons for decision
Section 25-10 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for the cost of repairs to premises held for income producing purposes, provided the repairs are not of a capital nature.
Taxation Ruling TR 97/23 explains the circumstances in which expenditure incurred by a taxpayer for repairs is an allowable deduction under section 25-10 of the ITAA 1997.
As the word 'repair' is not defined within the tax legislation, TR 97/23 provides that it is to take its ordinary meaning. Generally, a 'repair' involves a restoration of a thing to its former condition without changing its character. Works can fairly be described as 'repairs' if they are done to make good of damage or deterioration that has occurred by ordinary wear and tear, by accidental or deliberate damage, or by the operation of natural causes during the passage of time.
In your case, repairs were done to fix the deterioration that had occurred to the property since being occupied by tenants. The work done did not change the character of the property and does not amount to an improvement, is not a replacement of an entirety or an initial repair. The work done merely restored the former condition of the property.
Therefore, you are entitled to a deduction for the cost incurred to fix your rental property under section 25-10 of the ITAA 1997.
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).
