Edited version of private advice

Authorisation Number: 1051975785564

Date of advice: 29 April 2022

Ruling

Subject: Rental expenses - repairs

Question

Are you entitled to a deduction under section 25-10 of the Income Tax Assessment Act 1997 (ITAA 1997) for expenses incurred in replacing the damaged section of your rental property drainage system?

Answer

Yes. As the work undertaken to your income producing property, in response to the letter from the City Council, is not an initial repair, is not a replacement of an entity and is not an improvement. A deduction for the full amount incurred is allowable under section 25-10 of the ITAA 1997.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You own a residential property used to produce assessable income.

You received a letter from your City Council's drainage surveillance engineer regarding water drains at the property.

You engaged the services of a licenced plumber, who specialises in providing services in drainage installations and repairs to investigate and carry out all necessary works to ensure compliance with the local government Acts.

The plumber conducted a CCT drain camera inspection and advised that tree roots from a large tree at the front of the property had broken a concrete drainage pipe and caused it to collapse. This collapse prevents water from the buildings and surfaces, including stormwater on your land, from draining via your legal discharge point.

You have incurred expenses to replace the damaged section of your rental property drainage system.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 25-10