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Edited version of private advice
Authorisation Number: 1052174097895
Date of advice: 19 October 2023
Ruling
Subject: Deduction of expenses
Question
Are the costs incurred in relation to the agreement deductible to Company A as head entity of the Tax Consolidated Group pursuant to section 8-1 of the Income Tax Assessment Act 1997?
Answer
Yes
This ruling applies for the following periods:
Year Ended 31 December 2022
Year Ending 31 December 2023
Year Ending 31 December 2024
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 reposition a segment of its assets. Company B paid Company A for the costs incurred in doing so.
Reasons for decision
The costs incurred by Company A for repositioning 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.
Relevant legislative provision
Income Tax Assessment Act 1997 section 8-1