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Edited version of private ruling
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Ruling
Subject: Rental property expenses
Are you entitled to a deduction for repairs for your rental property?
Yes.
This ruling applies for the following period:
Year ended 30 June 2010
The scheme commences on:
1 July 2009
Relevant facts and circumstances
You have owned and rented an apartment situated near the sea.
Due to constant sea sprays the aluminium window frames have calcified and deteriorated to a stage where the glass cannot be safely held in the frames.
It was not feasible or economical to replace the frames alone as the new frames are built to size and fitted with new glass for installation.
The replacement of the aluminium windows was not an improvement but has restored the windows to their original function using materials and colour identical to the original aluminium windows.
You have incurred expenses in having the windows replaced.
Reasons for decision
Section 25-10 of the Income Tax Assessment Act 1997 allows a deduction for expenditure incurred for repairs to premises held or used solely for the purpose of producing assessable income.
Taxation Ruling TR 97/23 explains the circumstances under which work carried out will be considered to be a repair and an allowable deduction.
Paragraph 15 of TR 97/23 explains that repair for the most part is occasional and partial, and involves restoration of the efficiency of function of the property being repaired without changing its character and may include restoration to its former appearance, form, state or condition.
Replacing of the aluminium windows in a rental property with similar materials and colour does not alter the character or functionality of the rental property.
In your case, you were required to replace the aluminium windows in your rental property as the frames had deteriorated. Materials and colour used was identical to the original windows. Replacing the aluminium windows was to restore them to their original function.
Therefore, the replacing of the aluminium windows is a repair. Accordingly, the expenditure incurred is deductible.
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