Edited version of private advice

Authorisation Number: 1052202350736

Date of advice: 22 December 2023

Ruling

Subject: Temporary full expensing

Question

Are you entitled to claim specific expenses related to your office renovation under the temporary full expensing (TFE) measures?

Answer

Yes, you meet the requirements of temporary full expensing (TFE) in accordance with the provisions in subdivision 40-BB of the Income Tax (Transitional Provisions) Act 1997 (IT(TP)A 1997) for income year ended 30 June 20XX. The requirements to satisfy include being an eligible entity and the depreciating assets are eligible assets.

You are an eligible entity because you are a small business entity with an aggregated turnover of less than $5 billion in the income year ended 30 June 20XX.

Depreciating assets are eligible assets if they were first held, first used or installed ready for use for a taxable purpose between 7.30pm AEDT on 6 October 2020 and 30 June 2023. Subject to the type of depreciable asset acquired, exclusions can apply where you are not entitled to claim the expense under TFE. In your case, no exclusions apply to these specific expenses for example building and other capital works that you can deduct under Division 43 of the Income Tax Assessment Act 1997.

This ruling applies for the following period:

30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You bought a house with the intention of using it as an office for your professional practice and a residence.

You have made significant modifications to the house to create a separate area for business use.

As a part of this renovation, you made some structural and floor plan changes to the property to create a separate business area.

Toilet and washroom facilities have been constructed for your client's use. The area is suitable for an office style and signage has been placed in the doorways nominating client's use. This part of the house is not used for domestic use. All the lighting in the office area was replaced with office-style microprocessor lights.

You have had two conversations with ATO in a specified year regarding depreciation work for capital and non-capital works. During these conversations, you and the ATO staff went through the ATO website showing various depreciation rates. They also informed you that you can apply for instant write-off for the non-capital works under a new tax ruling.

You have completed the non-capital works exclusively for the business to be able to deliver your practice for clients in a professional business environment. You have another section of the house that you use for your domestic home, and the two do not overlap except for the same entry door.

The following are the depreciable assets you installed or were ready for use that you are asking if you are entitled to claim under temporary full expensing measures:

•         Microprocessor lighting in sessional room and in cabinets.

•         2 x operating functional exhaust/lighting fans in the office toilet and washroom.

•         Painting to business area.

•         Gas heater to client waiting areas.

•         Carpet.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 25-10

Income Tax (Transitional Provisions) Act 1997 Subdivision 40-BB

Income Tax Assessment Act 1997 Division 43