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Edited version of private advice
Authorisation Number: 1051637541831
Date of advice: 19 February 2020
Ruling
Subject: Rental properties - asbestos roof replacement
Question
Can a deduction be claimed for the forced replacement of an asbestos roof to a metal roof?
Answer
Yes
Section 40-755 of the income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for expenditure, which can be identified and specifically allocated to an environmental protection activity (that is, remedying pollution from the site of the earning activity) and therefore satisfies the sole or dominant purpose test.
These activities are the preventing, fighting or remedying of pollution (which includes contamination of the environment by harmful or such potentially dangerous substances as asbestos) in the circumstances specified in paragraph 40-755(2) (a) of the ITAA 1997. Also included are activities in treating, cleaning up, removing or storing of waste in the circumstances specified in paragraph 40-755(2)(b) of the ITAA 1997. The pollution or waste must be of, on or from a site on which the taxpayer carried on, carries on, or proposes to carry on an activity for the purpose of producing assessable income.
In your case, removing the damaged asbestos roof sheets from your rental property that is used to produce assessable income constitutes an eligible environmental protection activity as it remedies an environmental pollutant. The asbestos roof sheeting was removed with the sole or dominant purpose of preventing pollution of the site of your income earning activities. Therefore you are entitled to a deduction under section 40-755 of the ITAA 1997 for the expense incurred in removing the asbestos roof sheeting from your rental property.
This ruling applies for the following period:
1 July 20XX to 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You own a Commercial Factory Unit with XXX units.
The units are rented out and are currently earning rental income.
The tenants requested air monitoring tests to be undertaken.
XXXX provided an air monitoring test that revealed asbestos in the work environment.
The work was completed and involved:
· remove asbestos roof sheets
· closest match roof materials were used to replace the asbestos roof sheeting
· clean all units
Relevant legislative provisions
Income Tax Assessment Act 1997 section 40-755