Edited version of private advice

Authorisation Number: 1052385783900

Date of advice: 28 April 2025

Ruling

Subject: Rental deductions

Question 1

Is the work completed on the shower of your rental property consider a repair and therefore an allowable deduction under section 25-10 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer 1

Yes.

Section 25-10 of the ITAA 1997 allows a deduction for the cost of repairs to premises used for income producing purposes. However, subsection 25-10(3) of the ITAA 1997 does not allow a deduction for repairs where the expenditure is of a capital nature.

Taxation Ruling TR 97/23 Income tax: deductions for repairs explains the principles and the circumstances in which expenditure incurred for repairs is an allowable deduction.

In accordance with the principles contained in TR 97/23 it is viewed that the activities undertaken by Company X during their visits to the property were in relation to water leaking from your shower requiring plumbing maintenance.

Therefore, a deduction can be claimed under section 25-10 of the ITAA 1997 to the extent that the invoiced amounts from Company X relate to activities undertaken in relation to the shower of the property were to restore the function and effectiveness of the shower.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commenced on:

XX XX 20XX

Relevant facts and circumstances

On XX XX 20XX, you purchased an investment property for $XXX.

The property located at XX XX.

The investment property was available for renting soon after purchased.

The property was available for rent for the entire income year for which you are requesting the private ruling.

The property is managed by a XX real estate agent. Your property manager is XX XX.

Your relationship to the tenants is landlord/tenant.

The property is leased for a market rate of rent.

The real estate agents determine the weekly rental, based upon the market value in the area.

Early XX 20XX, the current tenants moved in just over 2 years ago, when the previous tenants moved out. The property was vacant only for a month or so during this transition.

You have never used the property for personal use.

On XX XX 20XX you had an inspection and assessment for the shower and kitchen area.

You have supplied a description of works required to repair the damage.

A plumbing company has provided a quote from below scope of works.

Proposed works completed

•                Carry out the removal and disposal of the existing shower screen.

•                Carry out the removal and disposal of the existing shower hob, shower base titles and shower walls tiles.

•                Prepare and clean area in preparation of wet seal.

•                Supply and install a primer and waterproof membrane of all walls and floors in 2 coasts.

•                Install 40mm shower angle to suit.

•                Re-bed the shower floor, falling correctly to the waste pipe.

•                Re-tile the shower floor and walls to suit.

•                Grout and silicone the entire shower.

•                Supply and install a new shower screen to suit.

•                Test to ensure good working order.

•                All rubbish to be removed from site, Site to be left clean and tidy.

On the XX XX 20XX the above works were completed. Total cost of works completed $XX.

You have paid the repairs costs in full.

According to your conversation with your insurer, your insurance does not cover this damage.

You are not considering selling the property in the near future.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 25-10

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