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Edited version of private advice
Authorisation Number: 1051980224116
Date of advice: 10 May 2022
Ruling
Subject: Deductions - rental property expenses
Question
Are the Underpinning expenses carried out at your rental property deductible as a repair?
Answer
Yes. The expenses meet the requirements in Taxation Ruling TR 97/23 and are deductible. 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
Sometime ago the taxpayers jointly purchased a property (the property).
The taxpayers rented the property from the time it was purchased.
The taxpayers have received rent from XXX each month since purchase.
As part of the taxpayer's agreement with XXX, they receive guaranteed monthly rent, even if the property isn't occupied.
The property has never been used by the taxpayers for their own personal use nor has there been a period when rent has not been charged.
Many years after the property was purchased it was noted that there may have been some movement of the property's concrete slab.
A short time later engineers were engaged to assess and report on any possible movement, the damage and possible rectification works.
The rectification works recommended by the engineers and subsequently undertaken was to underpin the property in order to stabilise the footings and prevent any further movement of the property.
Due to the deep layers of the reactive clays on the site in excess of 4m the engineers do not believe the Injection method would provide a reliable solution and such a traditional deep piering underpinning would be considered as a more suitable solution.
The underpinning involved drilling and casting reinforced piers of steel and concrete underneath the properties existing footing system.
Any fixtures or fittings that were damaged or required to be removed in order for the underpinning to take place, such as footpaths, rainwater tanks etc were reinstated at the completion of the works.
The works were completed with the recommendation to monitor the rectification works for the next 6 to 12 months
Although the property was vacant whilst the underpinning works were undertaken, it still remained a rental with XXX and rental income was still received.
No other work was undertaken whilst the underpinning works were completed.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 25-10