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Edited version of private advice
Authorisation Number: 1052111791885
Date of advice: 3 May 2023
Ruling
Subject: Deductibility of expenditure on realignment of assets
Question
Are the costs incurred by Company A to undertake the Works deductible pursuant to section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes.
This ruling applies for the following period:
16 February 20XX to 30 June 20XX
Relevant facts and circumstances
Companies A and B are Australian tax resident companies.
Company B, an entity unrelated to Company A, requested that Company A realign a segment of its assets (the Works). Company B paid Company A for the costs incurred in delivering the Works.
Reasons for decision
The costs incurred by Company A for the Works do not amount to improvements or change in character of its assets. The costs are not outgoings that are capital or of a capital nature and are deductible under section 8-1 of the ITAA 1997.
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