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Edited version of private advice
Authorisation Number: 1051976427274
Date of advice: 2 May 2022
Ruling
Subject: Rental expenses - repairs or improvements
Question
Are you entitled to an immediate deduction for the cost of podium rectification works you have incurred?
Answer
Yes. The podium works are not considered to be a renewal or reconstruction of an entirety, it is not an initial repair, or an improvement and the expense is in respect to an income producing asset.
The expenses meet the requirements in Taxation Ruling TR 97/23 and are deductible under section 25-10 of the Income Tax Assessment Act 1997. Further information about repairs can be found by searching 'QC 23635' on ato.gov.au
This ruling applies for the following periods:
Year ended 30 June 20XX
Year ended 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You were transferred 100% ownership of your rental property that is located within a complex.
The property has been rented out during the whole ruling period on a market rate basis to tenants through a property manager.
The property is managed by a body corporate and is under a strata title.
Your body corporate advised you of structural and waterproofing issues on the podium which has occurred over a number of years.
The podium is a concrete pavement that is between residential buildings.
The podium at the time it was originally constructed was in good working condition.
The body corporate engaged a structural engineer to undertake a structural investigation into the podium.
The investigation found a list of defective waterproofing to the podium.
The podium defect report recommended structural repair of the podium was required to fix the waterproofing issues long term.
All previous work done to rectify the deficiencies in waterproofing have been found to be of poor quality and defective.
The same structural engineer was also engaged to rectify the waterproofing issues to the podium. The contract provides the scope of the works conducted on the podium.
The structural engineer carried out the required work outlined in the contract to rectify the podium.
Your body corporate has created additional special levies called the "Podium work fund" and "podium project"
You have paid your share of the levies to your body corporate for the relevant income years.
The property continues to be rented out.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Income Tax Assessment Act 1997 Section 25-10
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